Myanmar is seeking a one-year, IMF-monitored programme to help it craft economic policies, pursue reforms and clear its debt arrears, according to International Monetary Fund documents published on Thursday.
The IMF said the country asked for the programme in December to help “achieve sustainable and equitable growth, reintegrate Myanmar with the global economy and reduce poverty.”
Myanmar, also known as Burma, has implemented rapid economic and political reforms since President Thein Sein’s semi-civilian government took over from a long-ruling military junta in March 2011, allowing elections, easing rules on protests and freeing dissidents.
Still, the IMF cautioned that Myanmar’s transition to an open market economy will take time, with the short-term outlook appearing “favourable” and the medium-term “promising.”
The pace of economic growth is likely to hit 7 per cent over the next couple of years from around 6.3 per cent this year. Gas exports are set to peak next year-15, it added.
But the IMF said its analysis suggested Myanmar is in “debt distress” because of arrears. It said the Paris Club of creditor nations had invited the authorities for talks on the arrears in late January.
“The authorities recognise that a successful arrears resolution is essential for Myanmar to re-engage with the international community and ensure debt sustainability,” the IMF said. “They aim to normalise relations with all creditors, supported by the program.”
Japan has already said it intends to waive part of the 500 billion yen Myanmar owes it in debt. Myanmar also owes nearly US$400 million to the World Bank and almost US$500 million to the Asia Development Bank.
The IMF said the main domestic risk facing Myanmar came from the government’s limited capacity to implement economic and social reforms. It also warned that a possible escalation of ethnic conflict in border regions could undermine investor confidence.
Myanmar’s military has stepped up shelling and air attacks on rebels in its northern Kachin state, raising doubts over assurances by the Myanmar government that it wants a peace deal to end the fighting now on China’s doorstep.
The Kachin rebels are fighting for greater autonomy.