Govt Growth Target Overshoots IMF Forecast Amid Calls for Aid

By Samantha Michaels 27 January 2014

Myanmar Govt Growth Target Overshoots IMF Forecast Amid Calls for Aid
NAYPYIDAW — Burma’s government is targeting higher economic growth than the International Monetary Fund has projected for the coming fiscal year, and has called for greater cooperation with international development partners to achieve that goal.

Speaking at the Second Myanmar Development Cooperation Forum on Monday, President Thein Sein said the government aimed for 9.1 percent growth in GDP for the 2014-15 year, compared with the IMF projection of 7.75 percent growth. He said cooperation with development partners had been key to achieving growth of more than 7 percent in GDP over the last two years.

“In the past we have relied only on the state budget for the development of our country,” he said in an opening address. “Now we can also count on other sources of finance, such as foreign aid, loans, and domestic and foreign investment, and by mobilizing these resources we have been trying to implement sectoral and regional development.”

While development partners at the forum pledged further support in the coming year, a top diplomat cautioned that investors would be watching to ensure that human rights are respected, following renewed reports of alleged anti-Muslim violence in the country’s west.

The two-day forum, organized by the Ministry of National Planning and Economic Development, brings together high-ranking officials from government, UN agencies and other members of the international community to discuss ways of enhancing development efforts as Burma transitions from decades of authoritarian rule. At the First Myanmar Development Cooperation Forum in January last year, Thein Sein and donors signed a non-binding agreement known as the Nay Pyi Taw Accord that set out guidelines for offering aid to the country.

“Myanmar is emerging decisively from conflict, fragility and isolation toward a prosperous and peaceful future,” Dr. Jim Yong Kim, president of the World Bank Group, said in a keynote address at this year’s forum.

Kim, who is the first sitting president of the World Bank Group to ever visit Burma, announced on Sunday that the bank would invest US$2 billion in the country in a multi-year program to improve access to electricity and health care. He said on Monday that the funds would also help develop the agricultural sector, which accounts for over 40 percent of the country’s GDP.

Under the former military regime, Burma was ineligible for World Bank development lending after it stopped payments on loans in 1987. The country’s debts to the bank were cleared last year, opening the way for further funding.

Burma has sought to win more foreign investment since Thein Sein’s government came to power in 2011, and has attracted interest in part due to its strategic geographic position between neighbors China and India. The country’s rich natural resources are also an asset, said Lei Lei Thein, deputy minister of national planning and development. However, she cited a number of challenges moving forward, ranging from widespread poverty to weak infrastructure, an underdeveloped private sector, and regional disparities in development.

“Most economic generating activities are concentrated in the main urban cities,” she told the forum. She added that it would be crucial to diversify the economy, which she said was dominated by agricultural projects and resource extraction activities.

Zaw Oo, an economic adviser to Thein Sein, said that of the targeted 9 percent growth in GDP for 2014, the government hoped to see a reduction in the percentage of GDP growth from forestry and an increase in contribution from the telecommunications sector.

“We also need to overcome inequality. Myanmar cannot leave out the many populations which have not been able to benefit from the progress of reforms,” he said, noting migrant workers, landless farmers and people who have been displaced by years of conflict between the government army and ethnic armed groups.

He urged the international community to increase support for capacity building, to remove disincentives to investment, and to fully resume official development assistance.

In honor of reforms, the West has suspended or lifted most economic sanctions on Burma since 2012. The European Union, which lifted sanctions in April last year, has committed to significantly increasing development cooperation with Burma over the next five years, according to EU Ambassador to Burma Roland Kobia.

“The envelope was already substantial, but it will be increased further,” he told the forum, saying funds would focus on peace-building, governance, rural development, health, education, trade and private sector development.

India also pledged to step up its investment. “While we have perhaps been a somewhat passive partner in the Nay Pyi Taw Accord, I would like to signal through this meeting that we would like to be a much more active participant in the process as it takes shape in the future,” said Indian Ambassador to Burma Shri Gautam Mukhopadhaya, adding that India has committed $1.5 billion to Burma’s development assistance, including $750 million in direct project aid.

US Ambassador to Burma Derek Mitchell also praised the Burma government on its political and economic reforms over the past two years, noting the president’s continued outreach to civil society. “I am confident that the international community and donors will support you in the task that lays ahead in the coming weeks, months and years,” he said.

However, he said international investors would be watching over the next year to determine whether reforms continued to progress, and to advocate for the inclusion of all of Burma’s people in national reconciliation efforts, regardless of gender, ethnicity or religion.

“Will the peace process move past conversation between those who bear arms to embrace farmers and women—average citizens at the local level who have always simply wanted peace and to live their lives normally, to raise their families and educate their kids? Will that comprehensive dialogue begin in this next year? And will dialogue and debate overcome violence and summary justice as a way of dealing with differences?” he said.

“We all will be watching. All of us here at this table, all the donors, will be watching this very closely, and in fact, I should say, so are our businesses. My businesses ask me, ‘Where are things going to move in the next year, in the next two years? Is it stable enough for us to invest large amounts of money, to create the jobs and the rest of the foundation for true stability and true development in the country?’ So we will be watching.”

The Second Myanmar Development Cooperation Forum comes at a time of some tension between the Burma government and members of the international community who have called on Naypyidaw to take stronger measures to ensure that human rights are respected.

Last week, the United Nations, the United States, the United Kingdom and other members of the international community urged a thorough investigation in Arakan State following reports of sectarian violence against a Muslim minority known as the Rohingya. The UN said Friday that it had credible information that at least 48 Rohingya Muslims were attacked and killed in Maungdaw Township—allegations which Burmese authorities have denied from the start and continued to deny over the weekend.