Myanmar: Staff Report for the 2015 Article IV Consultation—Informational Annex

This 2015 Article IV Consultation highlights that Myanmar's economic growth remains strong, but macroeconomic imbalances have increased significantly over the past year. Real GDP growth for FY2014/15 (April-March) is estimated to have reached 8.5 percent. The fiscal deficit increased to 3 percent of GDP in FY2014/15, while credit to the private sector continued to grow strongly at 35 percent (year over year) in March, albeit lower than in FY2013/14. The current account deficit widened to more than 6 percent of GDP, largely reflecting a rapidly rising trade deficit. The Myanmar economy is set for strong growth in 2015 amid signs of overheating. The economy is expected to grow by 8.5 percent, reflecting strong growth momentum and expansionary macroeconomic policies.


This 2015 Article IV Consultation highlights that Myanmar's economic growth remains strong, but macroeconomic imbalances have increased significantly over the past year. Real GDP growth for FY2014/15 (April-March) is estimated to have reached 8.5 percent. The fiscal deficit increased to 3 percent of GDP in FY2014/15, while credit to the private sector continued to grow strongly at 35 percent (year over year) in March, albeit lower than in FY2013/14. The current account deficit widened to more than 6 percent of GDP, largely reflecting a rapidly rising trade deficit. The Myanmar economy is set for strong growth in 2015 amid signs of overheating. The economy is expected to grow by 8.5 percent, reflecting strong growth momentum and expansionary macroeconomic policies.

Fund Relations

(As of July 31, 2015)

Membership Status: Joined on January 3, 1952; Article XIV.

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected Payments to the Fund 1/ (SDR Million; based on existing use of resources and present holdings of SDRs):

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When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

Exchange Rate Arrangement

The kyat had been pegged to the SDR at K 8.5057 per SDR since May 2, 1977. On April 1, 2012, the authorities replaced the official peg to the SDR with a managed float. The Central Bank of Myanmar (CBM) started daily two-way multiple-price foreign currency auctions with technical assistance (TA) provided by Monetary and Capital Markets Department (MCM). The auctions provide a mechanism for the market to determine an exchange rate that the CBM can use to set its new reference rate. However, the CBM reserves the right to intervene to moderate excessive exchange rate volatility in the foreign exchange market. The CBM has no predetermined target for the level of the kyat exchange rate or its trading range, and expects the kyat exchange rate to fluctuate according to supply and demand in the market. The de jure exchange rate arrangement was reclassified as managed float, and the de facto exchange rate regime is classified as other managed arrangement.

Myanmar continues to avail itself of transitional arrangements under Article XIV, although it has eliminated all Article XIV restrictions. Myanmar has made significant progress toward satisfying Article VIII obligations. Almost all current account restrictions have been removed through the implementation of the 2012 Foreign Exchange Management Law. However, Myanmar still maintains exchange restrictions and a multiple currency practice (MCP) subject to Fund approval under Article VIII. Exchange restrictions subject to Fund jurisdiction arise from (i) requirement of tax certification for authorizing transfers of net investment income abroad, and (ii) limitations on the remittance abroad of net salaries. The MCP arises from the two-way, multi-price foreign currency auction, and the authorities have sought a further IMF approval of the retention of this MCP. The Foreign Exchange Management Regulations were issued on September 30, 2014, as planned.

Article IV Consultation

Myanmar is on the standard 12-month Article IV consultation cycle. The last Article IV consultation discussions were conducted on June 4–17, 2014 in Yangon and Nay Pyi Taw. The Executive Board concluded the 2014 Article IV consultation on September 24, 2014.

Technical Assistance

Myanmar is now one of the largest recipients of IMF technical assistance (TA). Delivery is through a mix of resident advisors; experts in the Bangkok-based Technical Assistance Office for Lao P.D.R. and Myanmar (TAOLAM) and short-term HQ and expert missions. The key areas of focus are:

  • Central Banking: a resident foreign exchange advisor and a monetary operations advisor based in TAOLAM provide frequent responsive advice, supported by HQ missions. In addition regular expert missions are conducted in order to assist the CBM strengthen its accounting framework and systems.

  • Financial Sector Supervision: work in this area is led by a resident advisor in Yangon supported by HQ and expert missions, including on AML/CFT.

  • Revenue Reform: a resident tax administration advisor is supported by HQ and expert missions aimed at modernizing the Internal Revenue Department (IRD). Work on tax policy is delivered through HQ missions.

  • Public Financial Management: the focus is on capacity development of the Treasury Department, following its establishment in October 2014, which is led by an advisor based in TAOLAM and supported by HQ and expert missions.

  • Statistics: the work plan in this area has been developed following a multi-sector diagnostic mission in 2013. As a result, external sector and government finance statistics advisors have taken up duties in TAOLAM and expert visits continue to assist in the development of price statistics. A rebased CPI is scheduled to be released in 2015/16.

  • Macroeconomic Analysis: an advisor based in TAOLAM leads the work in this area that is closely integrated with the broader IMF training program.

In all areas the IMF coordinates closely with other development partners. In the financial sector, the IMF team has assisted the Central Bank of Myanmar develop a framework for coordination of international technical assistance.

Resident Representative

Ms. Yu Ching Wong completed her assignment on July 24, 2015, and Mr. Yasuhisa Ojima will assume the position beginning September 2015.

The Technical Assistance Office for Lao P.D.R. and Myanmar (TAOLAM)

The IMF opened TAOLAM in Bangkok in October 2012. The new office has been providing IMF technical assistance and training, in collaboration with the Bank of Thailand and the Government of Japan. There are currently five TA advisors in the office, covering public financial management, monetary operations, macroeconomics training, government financial statistics, and external sector statistics, for both Lao P.D. R. and Myanmar. Mr. David Cowen will head the office after the completion of assignment by Ms. Susan Creane in July 2015.

Myanmar: Technical Assistance by the Fund during 2014

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World Bank-Imf Collaboration

(July 2015)

The Fund and the Bank country teams for Myanmar, led by Mr. Yang (International Monetary Fund, IMF) and by Mr. Zachau (World Bank Group, WBG), maintain excellent working relations and dialogue on macroeconomic and structural issues.

The level of cooperation and coordination is excellent, and is becoming more regular as both institutions have been scaling up their engagement in Myanmar. Staffs routinely share country documents prepared by both institutions for their respective Executive Boards and collaborate regularly in areas of mutual interest.

Following the clearance of arrears to the International Development Association (IDA) in January 2013, the Bank has resumed normal lending relations with Myanmar and the International Finance Corporation (IFC) commenced its investment and advisory activities. A pre-arrears clearance IDA grant to finance a National community Driven Development Project preceded an initial Development Policy Operation in support of a program around macroeconomic stability and arrears clearance. Since then, four IDA financed projects have been approved by the Executive Board of Directors in electricity, telecommunications, public financial management, and education. The IFC has made investments in microfinance, hospitality and banking sector through the Global Trade Finance Program Facility. There are four IDA credit operations in the pipeline for delivery within the next 12 months: on health, agriculture, integrated river basin management, and electricity (guarantee for Independent Power Producer). IFC is developing its pipeline of investments in several sectors. The WBG has also significantly scaled up its analytical and advisory services.

Following the completion of the 2013 Staff Monitored Program, the IMF is continuing to provide intensive policy advice and technical assistance to Myanmar. On the surveillance side, annual Article IV consultations are supplemented with regular staff visits and frequent engagement through the resident representative office which was opened in 2013. Technical Assistance continues to intensify with two (three up to end July) resident advisors in Myanmar and five in the Bangkok-based TAOLAM alongside regular HQ-missions. Key TA priorities include development of monetary and exchange rate policy tools, enhancing bank supervision, strengthening tax policy and administration, enhancing budget preparation and execution, strengthening macro policy analysis and developing macroeconomic statistics. The Fund also has a wide-ranging training program for Myanmar.

There is strong collaboration between the WBG and IMF.

  • Macroeconomic policy advice to the authorities. Representatives from the WB participate in discussions during IMF Article IV missions to Myanmar. They also jointly carry out the Debt Sustainability Analysis (DSA). In this context, staffs from both institutions discuss macroeconomic policies and the main messages to the authorities. Discussions with the Ministry of National Planning and Economic Development were initiated recently on joint TA for real sector monitoring.

  • In the financial sector the World Bank and IMF have been coordinating technical assistance through regular information sharing based on an earlier joint note on IMF-WB Financial Sector TA Plan for Myanmar. World Bank TA has focused on strengthening the financial sector legal and regulatory framework (including technical input on the Banks and Financial Institutions Law, and microfinance and insurance regulation and supervision); state-owned bank reform, through completion of diagnostics of the four main state-owned banks; regulatory framework for mobile financial services; and development of a Financial Sector Development Strategy.

  • On fiscal management, the World Bank and the Fund have collaborated on producing a macro-fiscal analysis for the recently completed Public Expenditure Review; coordinating TA to the Large Taxpayers’ Office in its efforts to introduce a risk-based audit system; coordinating TA to the Treasury Department and the Myanmar Economic Bank on strengthening of the payment and settlement system; coordinating TA on debt sustainability analysis; and coordinating policy dialogue through participation in the PFM sector working group.

  • On structural reforms during the process of the preparation of the Myanmar Investment Law, the WBG has consulted frequently with the IMF on many provisions, in particular on issues related to capital and current account transfers and taxation. The IMF provided written comments on the 1st and 2nd drafts of the Investment Law to the IFC and the government.

  • On statistics, there has been good ongoing collaboration including a joint IMF-ADB-WB mission to Myanmar under the auspices of the National Strategy for the Development of Statistics (NSDS) project to coordinate support and advice to the government. The IMF is primarily providing TA to government finance statistics (Ministry of Finance), balance of payments (Central Bank of Myanmar), prices (Central Statistical Organization) and monetary statistics/central bank balance sheets. The ADB is providing TA on the SNA compilation framework. The World Bank is currently focusing support to overall statistical strategy development, institutional reform, and poverty monitoring.

Based on the above partnership, the World Bank and the Fund share a common view about Myanmar’s macroeconomic and structural reform priorities. Important reform priorities include:

  • Promoting long-term growth and diversification. Modernizing Myanmar’s economy will require removing impediments to growth by enhancing the business and investment climate, encouraging financial sector development, and further liberalizing trade and foreign direct investment. The government’s Framework for Economic and Social Reform would benefit from coordination across government agencies, broader consultation with stakeholders, and lessons from other countries’ experiences through substantial capacity building efforts.

  • Macroeconomic stability. Sustainable and inclusive growth will require macroeconomic stability, which must be underpinned by a consistent macroeconomic policy mix. Macroeconomic imbalances in Myanmar have increased over the past year as seen in rising inflation and higher current account and fiscal deficits. These imbalances need to be addressed by a tightening of monetary and fiscal policies along with exchange rate flexibility.

  • Foreign exchange policy. The authorities have come a long way in liberalizing the foreign exchange regime, including the re-unification of multiple exchange rates and the introduction of a daily FX auction in 2012. Foreign Exchange Management Regulations have been issued by the CBM. However, important work remains ahead, including finalizing and parliamentary approval of the Investment Law, which will replace the Foreign Investment Law and the Myanmar Citizens Investment Law. Deepening the foreign exchange market will require strong commitment by the CBM to follow the FX auction rules under the managed floating regime and further development of the interbank foreign exchange market.

  • Monetary policy. Strengthening the CBM’s capacity to conduct monetary policy is a critical prerequisite for macroeconomic management. To this end, the authorities need to ensure the CBM is granted full budgetary autonomy with a strengthened balance sheet and improved accounting systems. Continued attention to building tools and capacity for monetary policy is required. Priorities include regularly conducting basic open market operations, reforming reserve requirements, and refining the reserve money forecasting and targeting framework.

  • Financial sector. Liberalization of the financial sector needs to be complemented with a stronger regulatory and supervisory framework to maintain financial stability. Changes should be implemented step by step, in line with the development of needed supervisory capability and banks’ capacity. For instance, developing money markets and improving banks’ risk management are necessary precursors to liberalization of lending rates and maturities. The new Banks and Financial Institutions Law, drafted based on close collaboration of the WB and the Fund, will help set the sector on a modern footing. It will require the development and enforcement of modernized prudential regulations, including on bank capital, nonperforming loans, connected lending, and large exposures. This has become particularly urgent given the entry of foreign banks, which will also require regulations on foreign exchange lending, and revised regulations on capital flows and net open positions. The IMF and World Bank teams will work closely with the authorities in the coming months. Other priorities include developing a plan to reform the state-owned banks, establishing appropriate regulation of nonbank financial institutions, enhancing financial inclusion, modernizing financial infrastructure including the payments system and a credit bureau, and allowing banks to provide trade finance based on documentary collection.

  • Fiscal discipline and sustainability: Myanmar faces considerable fiscal pressures due to significant spending needs on the one hand and a narrow revenue base on the other. The increased in the budget deficit this year highlights the importance of maintaining fiscal discipline. Priorities include: (i) strengthened revenue collection, including through collection of the commercial tax on telecommunication services, more transparent management of natural resource rents, and rationalization of tax exemptions; (ii) strengthened debt management, including preparation of a debt strategy that explicitly reviews the costs and risks of borrowing decisions; (iii) control in growth of the wage bill by linking any future changes to fiscal sustainability and civil service performance considerations; and (iv) continued efforts at promoting fiscal transparency.

  • Prioritizing fiscal policies toward social and infrastructure spending. Continued increases in budgetary allocations towards health and education are welcome. There is still room for reallocating further resources to social sectors where spending levels remain relatively low. Further room remains also for increased efficiency in spending on infrastructure which is currently in a poor state and negatively affecting the business climate.

  • Strengthening statistical capacity. The Ministry of National Planning and Economic Development has outlined six priority areas for statistical development: (i) modernizing the system of national accounts by adopting the SNA 2008 framework and improving source data; (ii) strengthening the monitoring of poverty and living conditions; (iii) revising and updating the Central Statistical Authority Act 1952; (iv) developing and adopting a National Strategy for Development of Statistics; (v) establishing inter-agency statistical clusters to improve coordination and collaboration on statistical issues; (vi) strengthen capacity of Central Statistics Organization including through staffing and budget allocations.

    These are very sensible priorities, which will need to be implemented in a prioritized and sequenced manner. In the short term the government aims to implement SNA 2008 (today they broadly follow SNA 1968). This implies developing complementary data systems to produce the minimum required data sets and constructing a Supply-Use Table (SUT). The ADB is providing TA on the compilation framework/SUT and IMF is providing TA to selected sectors.

    WB is in discussions with the government on financial and technical support for a new household survey. Besides information on poverty and household living conditions, a new household survey will be an important source of data on the household final consumption for the SUT.

  • Private Sector Development. To enhance investment (especially FDI) reforms are needed to streamline procedures around funds transfers, including the inflow and repatriate of profits and capital. The Investment Law ensures the rights for funds transfer, but there is a great deal of uncertainty in regard to the procedures and time required for funds transfers to be approved by the CBM.

    The teams are committed to continue their close cooperation going forward. The table below details the specific activities planned by the two country teams over the period June 2015–May 2016.

Myanmar: Joint Management Action Plan June 2015–May 2016

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Relations With the World Bank Group1

(July 2015)

Myanmar became a member of the World Bank in 1952, IFC in 1956, IDA in 1962, and MIGA in 2013. By 1987, the Bank’s total portfolio amounted to US$804 million equivalent, of which US$752.8 million equivalent had been disbursed. New lending ceased after 1987. The last formal Consultative Group meeting was held in January 1986 in Tokyo, chaired by the World Bank.

Myanmar went into arrears with the World Bank in January 1998 and subsequently into nonaccrual status in September 1998. All credits that had been approved but which had not fully disbursed were cancelled and Myanmar was not eligible for new loans. The World Bank’s engagement with Myanmar became limited to monitoring economic and social developments in the country.

Relations between Myanmar and the World Bank were recently normalized. The World Bank provided a US$80 million grant in 2012 for a Community Driven Development Project. The Government of Myanmar cleared the full amount of its arrears to the World Bank in January 2013, in the amount of US$420 million through a bridge loan from the Government of Japan. The World Bank resumed lending to support Myanmar’s foreign exchange needs, including those associated with IDA arrears clearance.

The World Bank opened its first ever country office in Myanmar on August 1, 2012. Initial engagement with Myanmar was guided by an Interim Strategy Note (FY13–14). This was followed by a Systematic Country Diagnostic (SCD) that identified priorities for accelerating progress towards the twin goals that the WBG has committed to helping attain in its member countries: ending poverty and boosting shared prosperity.

The SCD provided the basis for a Country Partnership Framework (CPF), the first full country strategy for Myanmar since 1984. The CPF program, which runs from FY2015 to FY2017, has three areas of focus: reducing rural poverty; investing in people and effective institutions for people; and supporting a dynamic private sector to create jobs.

Myanmar’s provisional IDA 17 allocation is US$1.6 billion. The CPF identifies an indicative program based on this amount, with significant frontloading. In addition, IFC expects to provide up to US$1 billion in investments over the CPF period and US$20 million in technical assistance. MIGA will provide insurance against political risks based on demand by private investors.

Since the approval of the pre-arrears grant to finance a National Community Driven Development Project, seven IDA lending projects have been approved by the Executive Board of Directors in agriculture, additional financing for the community driven development project, river basin management, electricity, telecommunications, public financial management, health and education. IFC has made investments in microfinance, hospitality and banking sector through the Global Trade Finance Program Facility,

There are several WB lending projects in the pipeline for delivery within the next 12 months: on financial inclusion, health financing, electrification, and power generation. IFC is developing its pipeline of investments in several sectors. Apart from lending programs, the World Bank has significantly scaled up its analytical and advisory services.

Relations with the Asian Development Bank2

(July 2015)

Myanmar joined the Asian Development Bank (AsDB) in 1973 and operations started the same year. In 2012, as the international community resumed engagement with Myanmar as a result of significant economic and political reforms, the AsDB developed a road map for resumption of normal operations. The activities included initial assessments of the economy and of key sectors, provision of technical assistance, and development of an interim country partnership strategy for 2012–2014.

AsDB’s interim country partnership strategy for 2012–2014 (extended to 2016) seeks to support the government in achieving sustainable and inclusive growth. It focuses on (i) building human resources and capacities (capacity building in ministries in core areas of AsDB involvement, and education); (ii) promoting an enabling economic environment (macroeconomic and fiscal management; and trade, investment and financial sector reform); and (iii) creating access and connectivity (rural livelihoods and infrastructure development, especially energy and transport). AsDB will mainstream the thematic areas of good governance, environmental sustainability, private sector development, and regional cooperation and integration into its operations. AsDB will focus on the crosscutting areas of knowledge and partnerships. The AsDB Country Operations Business Plan 2014–2016 (finalized in November 2013), laid out an investment program covering energy, transport (roads), agriculture and natural resources, and urban development.

In 2014, AsDB commenced analytical and consultative work for a full Country Partnership Strategy, planned for the period 2017–2021, to be submitted for Board endorsement in 2016. The Country Partnership Strategy as well as the annual Country Operations Business Plans for 2015–2017 (finalized in January 2015) reflect a gradual shift towards increased sector focus and selectivity, focusing on transport, energy, and education and training as core sectors. It will apply a long-term programmatic approach in the core sectors, and is coordinated and aligned with evolving strategies and sector activities of other development partners.

Myanmar cleared its arrears to AsDB in January 2013. The AsDB has so far provided 35 loans totaling US$1,246,4 million for 29 projects and one policy-based operation. Of these, two loans amounting to US$6.6 million were from the AsDB’s ordinary capital resources (OCR) which have already been prepaid, and 33 loans were from concessional Asian Development Fund resources. The AsDB has so far provided technical assistance (TA) totaling US$49.0 million for 71 projects. Of these 71 TA projects, 41 were approved since AsDB reengaged with Myanmar in 2012.

With resumption of its engagement with the international community, Myanmar is an increasingly active participant in the Greater Mekong Subregion Economic Cooperation Program and the Association of Southeast Asian Nations (ASEAN). AsDB coordinates closely with the IMF, the World Bank, the UNDP, and other development partners and is actively engaged in various sector and thematic working groups formed by the government for aid coordination purposes.

The majority of AsDB assistance has been provided to support public sector management, followed by development of the agricultural sector (prior to 1988). The sector composition of AsDB lending to Myanmar is shown below:

Myanmar: Asian Development Bank Lending 1973–June 2015

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Source: Asian Development Bank

Statistical Issues

As of July 1, 2015

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Myanmar: Table of Common Indicators Required for Surveillance

(As of July 2015)

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Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds), state and local governments, and State economic enterprises (SEEs).

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.


Prepared by the World Bank Group’s staff.


Prepared by the Asian Development Bank’s staff.