WASHINGTON — The International Monetary Fund (IMF) on Wednesday projected a rise in Burma’s economic growth rate to 6.25 percent next year as a result of recent economic reforms and increasing foreign investment in natural resources and commodities exports. It praised the reforms and said new policies could turn Burma into “Asia’s next rising star.”
The IMF projected GDP growth to accelerate to 6.25 percent in in the fiscal year 2012/13, up modestly from an estimated 5.5 percent growth this year and 5.3 percent in 2010/11. Burma’s GDP in 2010/11 was US $45.4 billion, according to IMF data.
In a statement, the fund lauded the Burmese government for embarking on a historic set of reforms to modernize and open up its economy, which it said could facilitate strong and inclusive long-term growth that reduces poverty.
“These reforms are already bearing fruit. Growth is expected to accelerate to around 6.25 percent, bolstered by foreign investment in natural resources and exports of commodities,” said IMF Mission Chief Meral Karasulu. “With a commitment to strong reforms, Myanmar has the potential to vastly improve the living standards of its people and emerge as Asia’s next rising star.”
The IMF mission chief visited Burma this month to hold discussions on macroeconomic policies with Burmese Finance Minister Win Shein, Central Bank Governor Than Nyein, parliamentarians and representatives of the private sector and donors. Discussions on clearing Burma’s external arrears were also progressing, the IMF said.
IMF said inflation has declined and should remain moderate at around 6 percent next year. The exchange rate has been stable in recent months, with international reserves increasing to $4 billion, it added.
The fund stressed the need for the government to continue implementing well-paced economic reforms, which were begun about two years ago.
“Myanmar remains one of the poorest countries in Asia, with economic development stymied by many distortions. On the macroeconomic front, the government’s overarching priorities are two-fold: to maintain stability during the transition process, and to build the modern tools and institutions necessary to manage a rapidly changing economy,” it said.
Macroeconomic reforms should focus on three key areas, the IMF said: consolidating exchange rate unification, developing a consistent monetary policy framework and containing fiscal deficits, which will set the stage for higher and stable revenues.
“In all of these areas, the IMF will continue to provide technical assistance to the Myanmar government,” Karasulu said, adding that other international financial institutions and bilateral donors are also supporting the authorities’ broader reform efforts.
The IMF recently re-engaged with the Burma after the government began political and economic reforms. In May, the fund published its first report on Burma in decades and in July it opened an IMF office for Burma in Bangkok, Thailand.