Tuesday, July 25, 2017

Government drives up budget deficit with additional spending

President U Thein Sein’s outgoing government has submitted a supplementary budget request to parliament of K2.464 trillion (US$1.92 billion) with the defence ministry in line to receive the largest allocation, while health and education spending remain close to the bottom of the list.

Amyotha Hluttaw Speaker U Khin Aung Myint (centre right) arrives yesterday for the second day of the 13th parliamentary session. (Aung Htay Hlaing/The Myanmar Times)Amyotha Hluttaw Speaker U Khin Aung Myint (centre right) arrives yesterday for the second day of the 13th parliamentary session. (Aung Htay Hlaing/The Myanmar Times)

If approved by parliament, the additional spending would sharply increase the budget deficit at the risk of fuelling inflation and weakening the kyat.

The International Monetary Fund warned the government in July of the dangers of an overheating economy, saying that it was “essential” to tighten monetary and fiscal policies, estimating at the time that the government budget deficit would reach 5.5 percent of economic output.

Finance Minister U Win Shein released the figures on November 16 when presenting the government’s supplementary budget request to the Pyidaungsu Hluttaw, the combined houses that have convened for the 13th and last session of the outgoing parliament.

“We specifically analysed the demands for additional budgets of ministerial portfolios and departments of the Union government,” he said. New revenues and the status of ongoing projects were also taken into consideration, he added.

Analysts say the budget was swollen by spending during an election year. Public sector salary increases, widely seen as linked to the forthcoming general elections and funded by printing money, are seen as contributing to the rise in inflation.

It is also the last budget where the Ministry of Defence might expect a sympathetic hearing from a parliament dominated by the Union Solidarity and Development Party, which was crushed in the November 8 elections by the National League for Democracy.

According to documents given to members of parliament, the Ministry of Defence is to receive an additional K417 billion, the largest amount among the 26 ministries. The Ministry of Electric Power followed with K391 billion, while the Ministry of Finance requested K140 billion.

The ministries for energy, agriculture and communications each requested more than K100 billion.

Close to the bottom of the list came the Ministry of Education with K71 billion and the Ministry of Health with K91 billion. The office of the president requested an additional K1 billion.

Pyidaungsu Hluttaw Speaker Thura U Shwe Mann said the budget would be debated and go to a vote in December.

U Khaing Maung Yee of the National Democratic Force who represents Yangon’s Ahlone township in the lower house said he would closely scrutinise the budget requests.

Translation by Thiri Min Htun