IMF Executive Board Completes 2015 Article IV Consultation with Myanmar on August 28, 2015

Myanmar’s economic growth remains strong, but macroeconomic imbalances have increased significantly over the past year. Real GDP growth for fiscal year (FY) 2014/15 (April-March) is estimated to have reached 8.5 percent, while inflation rose to 8 percent (y/y) in May, up from 4 percent in October 2014, reflecting mainly strong domestic demand. The fiscal deficit increased to 3 percent of GDP in FY 2014/15, while credit to the private sector continued to grow strongly at 35 percent (y/y) in March. The current account deficit widened to over 6 percent of GDP, largely reflecting a rapidly rising trade deficit.
The Myanmar economy is set for strong growth this year amid signs of overheating. The economy is expected to grow by 8.5 percent. The projected increase in the fiscal deficit in the FY 2015/16 budget will provide an expansionary stimulus and contribute to strong credit growth and a rising current account deficit.
Directors stressed the importance of containing the fiscal deficit to address the signs of economic overheating. At the same time, they noted that additional resources may be needed for recovery and reconstruction spending, with support from development partners. Noting the low revenue collection, large development needs, and the necessity to ensure fiscal sustainability, Directors encouraged the authorities to broaden the tax base, prepare for the introduction of a value-added tax, limit tax incentives, condition transfers to states and regions on implementation capacity, and further reprioritize expenditures. Directors welcomed the authorities’ commitment to implement the Extractive Industries Transparency Initiative Standard.
Directors emphasized that implementing the structural reform agenda is essential to achieve inclusive and sustainable growth. Measures should focus on further improving the business environment, financial inclusion, health services, and education. Further improvements in institutional capacity, supported by continued technical assistance, and better economic statistics will be important to enhance macroeconomic management.
Press release at the official IMF web-site