External public and publicly guaranteed (PPG) debt and public domestic debt dynamics are assessed using the LIC DSA framework, which recognizes that better policies and institutions allow countries to manage higher levels of debt, and thus the threshold levels are policy dependent. The quality of a country’s policies and institutions are normally measured by the World Bank’s Country Policy and Institutional Assessment (CPIA). The most conservative thresholds are applied for the purposes of this DSA based on the average CPIA index of the last two years which indicate a weak rating for Myanmar.
The DSA was jointly prepared by the IMF and the World Bank staffs.
This risk rating is unchanged from the previous DSA, published in September 2015, as a part of the staff report for the 2015 Article IV consultation with Myanmar (SR/15/267) http://www.imf.org/external/pubs/cat/longres.aspx?sk=43293.0
The Asian Development Bank is expected to approve a total of US$3 billion in sovereign and non-sovereign loans over 2013–2018. The World Bank is expected to commit about US$1 billion in 2016–2018. In November 2015, the Prime Minister of Japan announced that Japan will commit an ¥800 billion (US$7.7 billion) package, which will comprise funding from both the public (through Japan International Cooperation Agency (JICA)) and private sectors to be spread over five years.
The typical historical scenario is not shown in this analysis. In the case of Myanmar, the historical scenario would imply an unlikely return to pre-reform policies: low noninterest current account deficits (consistent with binding international sanctions) and sustained real exchange rate pressures.
For the PV of total public debt to GDP ratio, the most extreme shock is the growth shock which causes a breach in the indicative benchmark in 2025/26, while fixing the primary balance leads to a breach in 2029/30.
The alternative cyclone scenario is based on the following assumptions: projected GDP growth is reduced by two-thirds in 2017 and 2018; the nominal exchange rate depreciates by 35 percent in 2017-2019; inflation is expected to double in 2017 and 2018; following historical experience both government revenue and expenditures are adjusted downward; financial aid and concessional finance is expected to increase.