Sep 1, 2011

IMF to help Myanmar reform exchange rate

IMF economists will visit Myanmar to help modernize its complicated exchange rate system, an official said Wednesday, in a sign that the country's new government is seeking economic reforms.

A technical team from the International Monetary Fund will visit the country in the second half of October, said Gita Bhatt, a spokeswoman for the Washington-based financial institution.

"We have received a request from the authorities in Myanmar to help them prepare to modernize their exchange rate system and lift restrictions on the making of payments and transfers for current international transactions," she said.

She declined further details on the trip. But the state-run New Light of Myanmar newspaper said that authorities had reached out to the IMF and sent trainees overseas to reform the exchange rate, calling it a top priority.

The "problem of exchange rate gap, main barrier to international trade, will be solved along with the proper evolution of market economy," the newspaper quoted Finance Minister Hla Tun as saying.

Myanmar maintains multiple exchange rates, with the kyat currency's official value -- which the public sector is required to use -- set far above the market level. Myanmar restricts its nationals from obtaining foreign currency.

A 2008 working paper by two IMF economists, which does not necessarily represent the views of the fund, found that Myanmar's losses in efficiency due to the exchange rate system were equivalent to 14 to 17 percent of its economy in 2006-2007.

Myanmar is a member of the IMF and economists from the fund generally visit once a year, Bhatt said. The last formal consultation was in February 2010.

The military has ruled Myanmar since 1962, but the country nominally switched to civilian leadership earlier this year after November elections chose a new national assembly.

Source: AFP