MYANMAR and the World Bank yesterday signed a US$200-million (Bt6.6-billion) loan agreement that would support the country’s macroeconomic stability and fiscal resilience.
This is the first time Myanmar is receiving direct financial support for its budget, aimed at accelerating economic changes needed for long-term peace and prosperity.
The agreement was signed by Daw Nwe Nwe Win, director-general of the Treasury Department under the Planning and Finance Ministry, and Ellen Goldstein, the World Bank’s director for Myanmar, Cambodia and Laos, in the presence of U Maung Maung Win, deputy planning and finance minister.
The government’s programme supported by this operation includes reforms to address rising inflation, public debt sustainability, efficiency of government spending and strengthening of tax administration.
“We are confident that our policy actions would help sustain growth and reduce poverty, and help improve public access to services like electricity, education and health.
“The reforms would also help Myanmar attract high quality investments that create more jobs and give more benefits to the poor,” U Maung Maung Win said. The development policy operation has two pillars.
The macroeconomic stability pillar supports reforms to promote prudent public debt management, improved fiscal discipline of state economic enterprises and more effective budgeting processes.
Reforms under the fiscal resilience pillar aim to increase tax collection, improve management of gas revenues and strengthen public finance management.
By providing funding directly to the budget to support these actions, the development policy operation provides long-term, soft financing for priority public investments.
“Budget support is an important tool to underpin key government reforms and implement priority government programmes” Goldstein said.
“This first budget support will help Myanmar modernise economic management and build a more effective state.
“This includes measures to maintain economic stability, which is essential for high levels of investment, inclusive growth and job creation, as well as fiscal measures that will allow for the expansion and improvement of public service delivery.”
The terms of the credit, which comes from the International Development Association, the bank’s fund for low income countries, include a repayment period of 38 years, a grace period of six years and a zero interest rate.