Tuesday, September 19, 2017

Myanmar receives first budget support from World Bank

The country is receiving its first ever budget support from the World Bank.

The World Bank and the Myanmar government signed a US$200 million credit for a First Macroeconomic Stability and Fiscal Resilience Development Policy Operation on August 18, according to a press release from the World Bank dated August 18.

The press release added that the financial support to the Union budget is aimed at accelerating economic changes needed for long-term peace and prosperity.  

The agreement was signed by Daw Nwe Nwe Win, director general of Treasury Department under the Ministry of Planning and Finance, and Ellen Goldstein, World Bank country director for Myanmar, Cambodia and Laos.

The government’s program supported by this collaboration refers to reforms to tackle rising inflation and public debt sustainability.

Other reforms supported include efficiency of government spending, and strengthening of tax administration. 

U Maung Maung Win, deputy minister for the Ministry of Planning and Finance, said that the operation would improve the physical and social infrastructure, such as access to power supply and healthcare services.

As a result, he remarked, the actions would improve Myanmar’s competitiveness in attracting investments.

“We are confident that our policy actions would help sustain growth and reduce poverty, and help improve public access to services like electricity, education and health.

“The reforms would also help Myanmar attract high quality investments that create more jobs and give more benefits to the poor,” he noted.

The World Bank stated that the Development Policy Operation has two mutually-reinforcing pillars. 

“The macroeconomic stability pillar supports reforms to promote prudent public debt management, improved fiscal discipline of State Economic Enterprises and more effective budgeting processes,” it said.

Reforms under the fiscal resilience pillar aim to increase tax collection, enhance management of gas revenues, and strengthen public finance management. 

By offering funding directly to the Union budget for those actions, the Development Policy Operation provides long-term, soft financing for priority public investments.

 Ms Goldstein said that this first budget support will assist the country to modernise its economic management.

“Budget support is an important tool to underpin key government reforms and implement priority government programs.

“This first budget support will help Myanmar modernise economic management and build a more effective state.

This includes measures to maintain economic stability, which is essential for high levels of investment, inclusive growth and job creation, as well as fiscal measures that will allow for the expansion and improvement of public service delivery,” she said.

The credit comes from the International Development Association (IDA), the World Bank’s fund for low-income and developing countries. 

The terms for the IDA credit include a repayment period of 38 years, with a grace period of six years and a zero interest rate.