Myanmar to continue budget deficit in 2015-16, missing 5% of GDP

Lawmakers, economists and other stakeholders hold talks to provide suggestions on the 2015-2016 Union Budget which is soon to be discussed in parliament, at RUMFCCI Building in Yangon on Friday.
Lawmakers, economists and other stakeholders hold talks to provide suggestions on the 2015-2016 Union Budget which is soon to be discussed in parliament, at RUMFCCI Building in Yangon on Friday.

Myanmar’s budget will continue to run in the red next fiscal year, with a deficit equivalent to 5.22 percent of GDP, according to forecasts presented at a consultation workshop on the 2015-2016 Union Budget.
The forecast exceeds the target of 5%-of-GDP deficit recommended by the IMF during its mission to Myanmar last month.
“It is necessary to bring budget deficit growth under control, so it does not exceed 5% of GDP”, said MP U Phyo Min Thein, who is also a member of the banks and monetary development affairs committee of Pyithu Hluttaw (Lower House) at the workshop Friday.
Emphasising the importance of increasing tax revenue in order to control the deficit, the MP highlighted Myanmar’s relatively low level of tax revenue compared to neighbouring economies.
“In comparison to ASEAN fellows that have tax revenues above 10% of GDP, Myanmar’s tax revenue stands at about 8.11%”, he said.
His statement echoed the sentiments of Myanmar’s Central Bank vice-governor Daw Khin Saw Oo, who told a parliamentary session earlier in the week that bringing the deficit under the 5% benchmark is vital to achieving sustainable economic development in the country.
During the IMF’s nine-day mission to the country, mission chief Yang Yongzheng said it is “imperative to prioritize spending and increase tax revenues” if the 5% target is to be achieved.
The IMF mission chief highlighted the importance of broadening the tax base, improving tax compliance and minimizing exemptions to mitigate the risk of the large proposed increased in public-sector wages that could reduce spending on health, education, and infrastructure “absolutely” needed to boost the country’s growth potential.
Regarding methods to increase tax revenues, U Zaw Pe Win, one of the panellists at the workshop, called for efficient tax structure and expanding the tax base to new payers to mitigate the country’s persistent deficit totalling more than K7, 200 billion for the three previous fiscal years.  He said the deficit for 2014-2015 FY amounted to K2, 751 billion, accounting for 4.16% of GDP while standing at K2, 886 billion for 2013-2014 FY.
At the workshop that brought together lawmakers, economists, civic groups and other stakeholders to provide suggestions on 2015-2016 FY, those present stressed the need of a balanced budget and called for raising revenues and reducing spending, pointing out the problem of tax evasion and slower growth in the country’s productive sectors.

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