External debt projected to increase to US$ 11.7 billion: Asia Development ...

External debt projected to increase to US$ 11.7 billion: Asia Development Outlook 2014

Published on Wednesday, 26 November 2014 18:29

Myanmar's external debt is projected to increase to US$11.7 billion or 19.4 % of GDP (when????), according to Asia Development Bank Outlook 2014. Total external debt declined to US$10.7 billion in the fiscal year 2013 from US$13.5 billion in the fiscal year 2012.

The government budget for FY 2013 amounted to US$19.5 billion or 32.8 % of GDP. The consolidated fiscal deficit widened to an estimated 4.9 % of GDP in FY 2013 from 3.8 % in FY 2012. The current account deficit in FY 2015 is likely to stay around 5 % of GDP.

"External debt will occur when we take loans, which are used to invest in businesses. For instance, the Cooperative Ministry takes foreign loans and then disburse them to farmers. It will be spent on education and development projects. We have new projects every year, so we have to take loans every year.

Businesses that run with foreign currency have to take loans and it's not a problem if they actually need funds," said Soe Thein, a respected Myanmar economist.

The economy is forecast to post a higher growth of 7.8 % in both FY 2014 and 2015, due to rising investment and improved business confidence. Inflation is projected to surge to 6.6 % in FY 2014 and 6.9 % in FY 2015. Currently, the government expenditures are on the rise. This year's budget is more than double from last year.

"It's impossible to run businesses without having debts. Traditionally, people take loans and then make capitalisation on it. To tell the truth, we should not take loans for all projects. Some do need loans while some don't need. It's a hot debate in the parliament. There are many criticisms over the loan-taking policy but it remains unchanged. As a matter of fact, our country has to take foreign loans. As I mentioned earlier, it is a bit natural that we take loans for essential works," Soe Thein added.

"The government has to take loan obligations step-by-step. The next government will have to repay debts. What I am saying is external debts. The government has internal debts as well. For instance, the government issues treasury bonds. The issuance of treasury bonds aims to get funds. The circulation of bank notes is not the bond. It is called "bill". This is a bit broad," said the economist.

"Some are criticising that there are many government ministries. So the government's expenditures are enormous. Recently, the parliament approved the salary increase for members of parliament. Some agree on the parliament's salary increase for MPs. What I want to say is the implementation of projects," he added.

Thanks to the current government's economic reforms, Japan paid Myanmar's debts owed to World Bank (WB) and Asian Development Bank (ADB), and Norway has written off Myanmar's debts. The government's high expenditure is one of the main reasons for the waste of state funds.

There was a criticism over the budget for construction of the grand military review.

MP Sandar Min at the Union Parliament on October 24 said: "The Ministry of Construction asked Ks 3 billion for the additional budget for the grand military review which is estimated to cost Ks 6.45 billion. This is not included in the budget estimation. The Ministry of Construction should not ask any additional budget for it.

When we looked at the project, the ministry spent more than Ks 421.978 million to buy furniture for the stage; Ks 500 million to make water available for the stage and used Ks 1 billion to provide electricity for the stage. Moreover, the ministry did not invite tenders and has given the contract to ACE Construction Company, which is implementing many projects in Nay Pyi Taw. Is this in keeping with the policy?"

The MPs also discussed about the need for transparency and the importance of not wasting the budget funds. The government ministries including the Cooperatives Ministry asked for the additional budgets. The Cooperatives Ministry's additional budget request is more than 10 % of original budget allowed.

"The government has allotted huge budgets to the Construction Ministry, the Border Affairs Ministry as well as the Cooperatives Ministry. But most of the budgets go to the Construction Ministry and the Border Affairs Ministry. The Border Affairs Ministry spends its budget for road, bridge and school construction schools in the self-administered border regions," MP Sandar Min said.

http://www.information.myanmaronlinecentre.com/external-debt-projected-to-increase-to-us-11-7-billion-asia-development/