Jul 11, 2013

Myanmar law giving its central bank autonomy due "within days"

Myanmar is expected to enact a law within days that will give more autonomy to the central bank, which is currently part of the finance ministry, a senior official in the president's office said on Tuesday.

The new law is part of a series of economic and political reforms pushed through by the quasi-civilian government of President Thein Sein, in office since nearly half a century of military rule ended in March 2011.

Parliament passed the law on Monday and it now goes to the president.

"The bill is expected to get to the president's office today. According to normal procedure, the president has to sign the bill into law within a week," the official said, asking not to be named since he was speaking to the media without authorisation.

"Since the president is leaving the country on a state visit to the UK and France on July 14, he can sign the new Central Bank Law within days," he added.

The website of the existing Central Bank of Myanmar says its aim is "to preserve the internal and external value of the Myanmar currency, the kyat".

Helped by the International Monetary Fund, the central bank introduced a managed float of the kyat in April 2012 as part of the unification of the exchange rate system.

The kyat first floated at 818 per US dollar, a level in line with the black market at the time but which the IMF and economists said was overvalued. Since then, the kyat has fallen and the central bank's daily reference rate was set at 980 on Tuesday.

Asked about the new law, senior central bank official Win Hteik said: "The most significant point, so far as I know, is the new law will give the central bank greater autonomy so that it will be able to operate like other international central banks."

"Its governor and three deputy-governors will be nominated by the president and approved by parliament. It will no longer be a department under the ministry of finance," he said.

Full rules and regulations would be published once the law was enacted, he said, adding that these could include details of how joint-venture banks could be set up.

Under present plans, foreign banks will only be allowed to set up joint ventures with local banks initially when they are allowed to operate in the country. The date for that has not been set, although more than 30 foreign banks have set up representative offices.

Source: Reuters