Myanmar’s new government faces a historic opportunity to jump-start the country’s economic development and lift living standards, says the International Monetary Fund in its annual assessment of the Southeast Asian economy.
The IMF report acknowledges the progress that has already been made in economic reforms over recent months, including steps to reform the exchange rate.
Myanmar has a complex exchange rate system with many restrictions that give rise to multiple exchange rates. This system increases transactions costs, discourages foreign direct investment and trade, encourages informal activity, and has put appreciation pressure on Myanmar’s currency, the IMF said in a press release on May 7.
Last month, the authorities took the first step toward exchange rate reform by adopting a managed floating regime.
Myanmar plans to complete the process of exchange rate unification, including removing all exchange restrictions and eliminating multiple currency practices before their target date of end-2013 when the Southeast Asian Games are due to be held in the country.
The IMF says that with appropriate policies, including a stable macroeconomic framework, the previously isolated country could fulfill its considerable potential, and deliver inclusive and sustainable growth.
“Myanmar could see strong growth if it pursues the necessary reforms to take advantage of its rich natural resources, young labor force, and proximity to some of the world’s most dynamic economies, including China and India,” says Meral Karasulu, IMF mission chief for Myanmar,
Against the background of political and economic changes in the country, growth in Myanmar is picking up modestly. Last year, GDP growth was estimated to have increased to 5.3 percent, and is expected to rise to 5½ percent in FY 2011/12, and 6 percent the following year.
Photo: Mckaysavage
