Economists debate return of IFIs
Volume 31, No. 620
March 26 - April 1, 2012
INTERNATIONAL financial institutions are likely to return to Myanmar if the April 1 by-elections are accepted by the global community. However, some economists are not thrilled at the prospect of global lenders returning.
United States citizen and economic consultant Mr Rick Rowden said during a recent workshop at an NGO in Yangon that the International Monetary Fund (IMF) was known for its insistence on a clear divide between the private and government sectors.
He added that if the World Bank came to Myanmar, it would push for the government to vacate the health and education sectors, which he said would make both more expensive.
“In countries that offer only private healthcare and education, poor people stop sending their kids to school and bringing them to clinics when they’re sick because it’s too expensive,” he said during the workshop at ActionAid in early March.
He said that the measures often created a society where only the wealthy could access quality healthcare and education.
When Myanmar attempts to unify its multiple exchange rates in the next financial year, which starts on April 1, the IMF will give technical advice, which Mr Rowden said would be welcome. But when the IMF begins to try and influence the Central Bank to change its monetary policies, it would create a problem between importers and exporters.
“My advice [to the government] is to ignore the World Bank and keep control of the healthcare and education sectors, and don’t let the IMF dictate budget choices,” he said.
Mr Rowden also advised the government to maintain its links with the business community because severing those relationships would leave it unable to properly implement infrastructure and services upgrades in the future.
Associate professor of economics at Macquarie University in Sydney Dr Sean Turnell said the government had so far adopted policies that would be recommended by the IMF and World Bank.
“Very often the policies of these institutions have been problematic – sometimes they impose a ‘one size fits all’ approach that can be inappropriate in different circumstances,” he said.
However, at the core of advice from both institutions are a number of broad measures that should serve Myanmar well, he said. These include a sound fiscal policy (which should allow increases in spending on health and education, but reductions in military spending), a realistic unified exchange rate, stress on property rights, rule of law and the problem of corruption, he said.
Union of Myanmar Federation of Chambers of Commerce and Industry vice president Dr Maung Maung Lay quoted IMF and World Bank representatives as saying the government could choose to accept their advice or ignore it.
He added that it was hard to separate the private and government sectors and both were required to keep a close eye on the other for the economy to work properly.
Economist Dr Zaw Oo said the government, media and economists had to cooperate to develop the country, adding that the most important job at hand was setting a workable policy framework.
“We have to tell them [international finance institutions/ investors] first what we want, then we will have to cooperate with them but we need to ensure that they do not exploit institutions,” he said.
“The government’s role should just be to supervise and guard against unfair practices in the market, while also protecting the environment,” he said.