US offers financial carrot to help Burma
As a reward for political reform in Burma, the United States has moved to support international financial institutions - including the International Monetary Fund, World Bank and Asian Development Bank - in assisting the country in rebuilding its economy.
Secretary of State Hillary Clinton signed a partial waiver yesterday to lift the restrictions on global financial institutions imposed under the Trafficking Victims Protection Act, according to a statement.
It will allow the US to support assessment missions and limited technical assistance provided by the IMF and World Bank, it said.
“Assessments by international financial institutions will provide critical means to gain a greater understanding of Burma’s economic situation, particularly its severe poverty alleviation needs and capacity gaps,” the State Department said in the statement.
Burma was listed last year among nations that do not comply with minimum standards in combating human trafficking in an annual State Department report, along with 22 other countries including North Korea, Iran and Yemen. Under US law, the president can determine to withhold aid and development assistance to the worst offenders.
Last month the IMF concluded its Article IV mission led by Meral Karasulu, deputy division chief of the Asia and Pacific Department of the fund, to provide advice to Burmese authorities on economic development and foreign-exchange problems.
Karasulu said “the new government is facing a historic opportunity to jump-start the development process and lift living standards”.
Burma has high growth potential and could become the next economic frontier in Asia, if it can turn its rich natural resources, young labour force and proximity to some of the most dynamic economies in the world to its advantage, she said.
The IMF is advising the country on economic management, particularly reforms to its Byzantine exchange rate system. The official rate of the kyat currency – 6 kyat per US dollar – used to calculate the budget and revenues of state enterprises is about 120 times over its market value against the greenback, fuelling suspicions the government could have vastly underreported its revenues.
Only state banks can conduct transactions with overseas banks, forcing many transactions into the informal sector.
Those constraints have impeded business and foreign investment in the country.
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