Govt Proposes 20% Budget Rise Boosting Education, Defense and Health

By Yen Saning 30 January 2015

RANGOON — President Thein Sein’s cabinet this week asked Burma’s Parliament to approve a sharp increase in government spending in 2015-2016, with an overall 20 percent raise in expenditures that would result in an approximately US$23.2 billion budget.

In his last year in office before the elections, the president proposed a jump in education spending, significant increases in health and defense expenditures, and a raise in civil servant salaries.

The Budget Bill for the fiscal year 2015-2016, which commences on April 1, would raise total government expenditures to 23,230 billion kyats, according to parliamentary documents released earlier this week. The proposal represents a 20.4 percent increase from last year when overall spending stood at 19,291 billion kyats.

Government revenues are expected to slightly increase next year to 19,403 billion kyats, leaving the government with a deficit of around 3,827 billion kyats ($3.8 billion), according to the documents.

Phyo Min Thein, a National League for Democracy member who is on the Lower House Public Accounts Committee, said the party was still studying the Budget Bill, adding, “We will surely have some reaction and criticism of the proposed National Budget.”

The Education Ministry would be the greatest beneficiary of the proposed spending increase, as its overall budget would grow to 1,409 billion kyats ($1.4 billion), representing a 21.6 percent increase from last year when the ministry received 1,158 billion kyats.

Under Thein Sein’s proposal, the Health Ministry’s budget would grow to 757 billion kyats ($757 million) and Defense Ministry spending would expand to 2,750 billion kyats ($2.7 billion), a year-on-year increase of 6.8 percent and 5.2 percent, respectively.

As a relative share of the overall budget, the Defense Ministry’s share declined from 13.5 percent to 11.1 percent, the Health Ministry’s share fell from 3.7 percent to 3.3 percent, while the Education Ministry’s share grew marginally from 6.01 percent to 6.07 percent.

Under Thein Sein’s Budget Bill, the Border Affairs Ministry would receive 130 billion kyats next year and the Home Affairs Ministry 286 billion kyats, representing a 9 percent increase and 7.5 percent decline, respectively, for the two army-controlled ministries.

Last year, Thein Sein’s government already proposed raising salaries of civil servants, which remain paltry by any standards, but Parliament has yet to endorse the plans.

Minister of Finance and Revenue Win Shein told Parliament that 2,901 billion kyats, or 12.5 percent of total budget, would be reserved for civil servant salaries next year, state-run newspaper Myana Ailin reported. Minister of Health Than Aung was quoted as saying that about two-thirds of his ministry’s budget next year would go to “medical treatment for the public.”

Ngu Wah Win, a research associate with the Myanmar Development Resource Institute-Centre for Economic and Social Development (MDRI-CESD), said the government could afford to increase overall expenditure because of Burma’s strong economic growth.

Ngu Wah Win, whose institute advises the government, added, “Education expenditure increased since the whole budget also increased, but it is still very low compared to [rest of] the region.”

Burma’s economy grew with 7.8 percent last year, according to the Asian Development Bank, and GDP stood at approximately $60 billion.

Since taking office in 2011, Thein Sein’s nominally-civilian government has expanded the government budget by floating the kyat’s exchange rate and bringing Burma’s revenues from natural gas export on the books. A growing economy and improved tax collection is raising government income, while the lifting of international sanctions has resulted in access to credit from international financial institutions and donor countries, such as the World Bank and Japan.

Defense vs Social Spending

The defense, education and health ministries have long been the focus for analysis of the government’s priorities by the political opposition, social sector organizations and independent economists. They used to criticize the former junta over its ballooning defense budget and the small amount of funds allocated to education and health.

Although military spending as a share of total budget has sharply fallen under Thein Sein compared to the days of military rule—when it would cover about a fifth of all spending—the absolute budget allocated to Defense Ministry has remained stable or increased slightly, as it would again under the proposed Budget Bill.

Under the 2015-2016 budget, which is up for discussion and a vote in Parliament in the coming weeks, military spending still outstrips the combined spending on both social sectors by some 584 billion kyats (about $584 million).

By comparison, Thailand’s military junta last year proposed allocating 19.5 percent of the country’s $81.08 billion budget for education, while defense received 7.5 percent, Reuters reported.

The powerful Burma Army is also known to have other revenues sources that are kept off the books, such as income generated from secretive military-owned conglomerates Union of Myanmar Economic Holdings Ltd and Myanmar Economic Corporation. Under the Constitution, the army also under certain circumstances has powers to allocate more defense funds.

Minister of Defense Lt-Gen. Wai Lwin was quoted by local media as telling Parliament earlier this week that about 51 percent of his expanded budget was earmarked for salaries and allowances, while about 29 percent was reserved for military hardware such as vehicles, warships and weaponry.

Thein Sein’s reformist government has repeatedly pledged to increase social spending, but this year’s proposed increase in education marks the greatest jump yet.

The Myanmar Times quoted Minister of Finance Win Shein as telling Parliament that some of the extra education funding would go towards hiring 50,000 additional teachers at 16,800 primary schools, 30,000 middle schools and 10,000 high schools.

Min Khin, an advisor to the NLD’s Economic and Social Committee, said the party advocates for a greater increase in social spending than has been proposed by Thein Sein.

“Education and health budgets have increased, but it should increase more than now. And what more important is that [the funds] are used in a valuable way—so far we haven’t seen it, mostly funds are being used to upgrade [school and hospital] buildings that are of low quality,” he said. Min Khin added that the NLD would like to have more public discussion on the government budget.

Wunna Htun, governance program coordinator at international NGO Action Aid, said he welcomed the proposed jump in education spending, but said it would not necessarily result in great improvement of the education system as some 80 percent of the ministry’s budget is spent on teachers’ salaries.

“Only the remaining 20 percent is used to develop the classroom, like repairing classrooms. So, even if the proposed budget is increased, it will still be not enough” to improve education standards, said Wunna Htun, whose organization advocates for increased social spending in Burma. He added that it was important that the additional funds are spent effectively.

Additional reporting by Paul Vrieze.