Govt asked to clarify choices to deal with budget deficits

Myo Myint from the Economic Affairs Committee (central) of the National League for Democracy (NLD) Party noted that some 40 per cent of the deficits are financed through the printing of new banknotes.

Since the Thein Sein government was formed in 2011, Myanmar has shouldered combined budget deficits worth Ks 10 trillion.

The deficits stood at Ks 2.16 trillion in the 2011-12 fiscal year, before dropping slightly to Ks 1.95 trillion in the next fiscal year. In the 2013-14 fiscal year, the deficits rose to Ks 2.93 trillion. In the current fiscal year, the deficits stand at Ks 2.75 trillion. 

 “The budget deficit for the 2015-2016 fiscal year is set at Ks 3,800 billion,” said Sein Htay from NLD’s Economic Affairs Committee (central). “We should not run budget deficits every year.” 

Meanwhile, banknotes in circulation were valued at Ks 6.7 trillion in the 2011-12 fiscal year, or about three times higher than the deficits. The value jumped to Ks 9 trillion in the next fiscal year, said Aung Ko Ko, an economist.

He noted that the value of banknotes in circulation in the 2013-14 fiscal year was slightly lower than the previous year.

“It remains unknown if this government addresses budget deficits solely by printing money, or through treasury bonds or overseas loans,” the economist said. 

The previous junta government was heavily criticised to have printed money to address deficits. Due to high inflation, treasury bonds could not find buyers. Meanwhile, the room for overseas loans was limited. 

Myanmar’s overall tax revenue is less than 5 per cent of gross domestic product, while public expenditure amounted to 27.2 per cent of the domestic economy. Public debt is now around 43 per cent of total domestic output. The government has so far defended that budget deficits are necessary given the country’s needs for basic infrastructure and services.