YANGON—Myanmar’s Union Parliament approved a motion on Wednesday to borrow over 1.3 trillion kyats (US$925 million) from the Central Bank of Myanmar (CBM) to cover budget deficits as the country’s spending on economic and social recovery and health care is expected to increase due to the COVID-19 pandemic.
Deputy Minister of Planning, Finance and Industry U Maung Maung Win said the current deficit for the 2019-2020 fiscal year is 6.6 trillion kyats and that borrowing from the CBM will fund 20 percent of the total deficit.
The deputy minister said auctions of both treasury bills and bonds will each cover another 40 percent of the deficit. According to the CBM, treasury bonds and treasury bills are auctioned once a month and twice a month, respectively.
Myanmar has recorded budget deficits for the past five fiscal periods, posting shortfalls of 3.2 trillion kyats in the 2015-16 fiscal year; 2.3 trillion kyats in 2016-17; 2.7 trillion kyats in 2017-18; 1.5 trillion kyats in 2018 (April-September 2018 was a transitional fiscal year); and 2.95 trillion kyats in 2018-19.
The Ministry of Planning, Finance and Industry (MOPFI) expects budget deficits to widen this fiscal year (2019-20) and next due to the extra spending needed to mitigate the impact of COVID-19 on the economy. The deficit will be calculated at the end of the fiscal year in September.
CBM Deputy Governor U Bo Bo Nge said that the government’s borrowing from CBM is declining year-on-year due to income from treasury bond and bill auctions.
According to the CBM, the government borrowed 84 percent of the budget deficit from the CBM in 2015-2016, 53 percent in 2016-2017, 25 percent in 2017-2018 and 27 percent in 2018-2019.
U Bo Bo Nge said MOPFI and CBM are negotiating from time to time about the budget spending of the ministries to reduce the government’s reliance on CBM financing and to encourage more financing from bonds.
According to the 2019-2020 Budget Law, the government cannot fund more than 9 trillion kyats through loans, including bond and bill auctions.
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