Myanmar will have to sell treasury bonds again due to the consecutive budget deficits, according to the Ministry of Finance.
The government is looking to take loans from home and abroad to solve the deficit. All the regional and state administrations face similar problems as the union government struggles to devolve investment.
Maung Maung Win, permanent secretary from the Ministry of Finance, said: “We have been trying to solve the deficit by taking out loans. Myanmar has old and new debts owed to foreign countries.
“There have been consecutive budget deficits not only under the current administration but also in the past. The government expenditures depend on policy. In some circumstances, the government has to spend more money than it receives. So it cannot be said that we will reduce expenditure despite the deficit. We need to make effort to develop the country by making better use of the budget,” he added.
The deficit from the 2012-13 financial year to 2014-15 was Ks7.2 trillion.
Normally, the Central Bank of Myanmar (CBM) sells three-month treasury bonds with a 4 per cent interest rate and two- to five-year bonds with variable interest rates.
The deficit is likely to be higher this year due to a significant hike in the dollar’s value. The current rate was Ks1,020 per dollar this year, rising to Ks1,140 on the market.
Last year, the government drafted its budget by fixing the kyat at Ks950-980 per dollar. It is called the ‘budgetary assumption rate’ by the CBM. The rate was Ks1020 per dollar when the government drafted the budget in September and October 2014. There will be additional budgetary requests as the dollar price soars.
Source: Eleven Media