The government is expecting GDP growth to hit 7.6 percent in 2018-19, President U Win myint said at the National Planning Commission meeting last week. The higher level of growth is expected amid higher government spending and a wider budget deficit.
The National Planning Bill and Union Budget Allocation Bill for the new 2018-19 fiscal year which will begin on October 1 has been submitted to the Pyidaungsu Hluttaw, which will resume on July 23. The two bills have already been approved by the government.
The president’s GDP forecast of 7.6pc is higher than that of the World Bank, which is predicting growth of just 6.8pc over the same period. In 2017-18, Myanmar’s GDP expanded by 6.4pc. The year before that, GDP grew by 5.9pc.
While President U Win Myint is expecting the projected level of growth to come supported by higher foreign direct investments (FDI) flowing in, businessmen say the situation on the ground is less promising.
U Win Oo, a businessman and former Hluttaw MP, reckons “foreign businesses which have already invested here are in a situation where they are worried about whether their business will be able to continue sustainably or not,” he said on Monday.
The way he tells it, “The government has been saying that FDI will flow in for over three years now. But even domestic businesses have been facing difficulties lately. Anyone who sees this will not come to invest,” he said.
U Khin Cho, Public Accounts Committee member of Pyithu Hluttaw, said that if the government can resolve the Rakhine situation, FDI levels will improve. “Growth in FDI depends on the problems in Rakhine. If those problems can be solved, FDI will enter,” he said.
U Win Oo agreed. The way he sees it, the government should be more practical with its assumptions and growth projections. “They should not overestimate potential growth like the previous government because actual growth will end up underperforming,” he said.
Budget deficit
Meanwhile, total earnings, mostly from taxes collected, in the coming fiscal year is targeted to be around K20 trillion compared to total projected government spending of around K24.9 trillion, resulting in a budget deficit of K4.9 trillion for 2018-19.
That’s the highest deficit since 2011-12. During U Thein Sein’s former administration, the deficit was hit a high of just over K3 trillion in 2015-16.
Currently, the budget deficit stands at around K4.6 trillion, according to U Maung Maung Win, deputy minister of planning and finance.
The targeted deficit of K4.9 trillion in the coming fiscal is “massive,” said U Win Oo, adding that “the previous government managed to keep it under K3 trillion. When the current government took power, it promised that it would cut down on spending. Yet, it [the deficit] is increasing.”
And while government earnings are expected to continue growing, some say this will come mainly from the natural resource sector, including from launching bidding rounds for free oil and gas blocks and licensing mining blocks which recently recommenced after being suspended for two years.
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