The FINANCIAL -- The Republic of the Union of Myanmar and the World Bank today signed a US$200 million credit for a First Macroeconomic Stability and Fiscal Resilience Development Policy Operation.
This is the first time Myanmar is receiving direct financial support to the Union Budget, aimed at accelerating economic changes needed for long-term peace and prosperity.
The Agreement was signed by Daw Nwe Nwe Win, Director General of Treasury Department, Ministry of Planning and Finance, and Ellen Goldstein, the World Bank Country Director for Myanmar, Cambodia and Lao PDR, in the presence of U Maung Maung Win, Deputy Minister of Planning and Finance, according to the World Bank.
The Government’s program supported by this operation includes reforms to address rising inflation, public debt sustainability, efficiency of government spending, and strengthening of tax administration.
“We are pleased to sign this collaboration between the government of Myanmar and the World Bank. We are confident that our policy actions would help sustain growth and reduce poverty, and help improve public access to services like electricity, education and health. The reforms would also help Myanmar attract high quality investments that create more jobs and give more benefits to the poor,” said U Maung Maung Win, Deputy Minister, Ministry of Planning and Finance.
The Development Policy Operation has two mutually-reinforcing pillars. The macroeconomic stability pillar supports reforms to promote prudent public debt management, improved fiscal discipline of State Economic Enterprises and more effective budgeting processes. Reforms under the fiscal resilience pillar aim to increase tax collection, improve management of gas revenues, and strengthen public finance management. By providing funding directly to the Union budget to support these actions, the Development Policy Operation provides long-term, soft financing for priority public investments.
“Budget support is an important tool to underpin key government reforms and implement priority government programs” said Ellen Goldstein, the World Bank Country Director for Myanmar, Cambodia and Lao PDR. “This first budget support will help Myanmar modernize economic management and build a more effective State. This includes measures to maintain economic stability, which is essential for high levels of investment, inclusive growth and job creation, as well as fiscal measures that will allow for the expansion and improvement of public service delivery.”
The credit comes from the International Development Association (IDA), the Bank’s fund for low income countries. The terms for the IDA credit include a repayment period of 38 years, with a grace period of six years and a zero interest rate.