IMF Cautions Myanmar on Rising Fiscal Risks
Growth picked up in the country after
The reforms led to a lifting of long-running international sanctions and efforts to woo foreign investments, boost employment, and beef up infrastructure.
Growth forecast up
The IMF said the country's economic outlook is "favorable" with growth expected to accelerate slightly to 8.5 percent in the fiscal year ending
Inflation is expected to remain contained at around 6.5 percent while increasing capital inflows outweigh a widening external current account deficit, the Fund said.
"There are, however, risks to the outlook," Davies warned in the statement.
"Fiscal and external buffers remain thin and demand-side pressures on inflation and large capital inflows will strain the still-infant macroeconomic management tools," he said.
The expected entry of foreign banks to the already rapidly growing financial sector will place further demands on macroeconomic policy and stretch scarce supervision capacity, he said.
"Fiscal risks are also rising despite recent reductions in the fiscal deficit. These stem from the use of external borrowing to finance off-budget operations, increasing tax exemptions, and changing relations with state and regional governments and state economic enterprises."
The IMF forecast that fiscal deficit is expected to remain within the authorities' target of five percent-of-gross domestic product (GDP)-the broadest measure of goods and services across the economy.
However, it said, this is in part due to large one-off revenues from telecom licenses.
Need to increase tax revenues
The IMF said that
Davies said that the ongoing process to make the
"Further progress in building monetary policy tools is needed to address inflationary pressures and manage foreign exchange inflows," he said.
The expected introduction of treasury-bill auctions in 2015 will provide a framework for reducing the central bank's deficit financing and lay the basis for eventual interest rate liberalization, he said.
During the consultation process, the IMF mission met with Minister in President
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