CNI News

15 December 2023

According to the budget information released by the Ministry of Planning and Finance of the State Administration Council in October, the budget deficit is about eight billion kyats for the 2023-2024 fiscal year. 

Although there is an annual budget deficit every year, the budget deficit of this year may be more than those of previous years, said business people.

This year, military spending is already rising due to armed conflicts and the government's tax revenue would decrease, pointed out economic commentators.

The action of the central bank to fill the budget deficit must be monitored and the government might counter the budget deficit by collecting tax from expatriate workers and collecting increased taxes from local entrepreneurs, U Thet Zaw, an economic commentator, told CNI News.

" There are many ways to fill the shortage of money.  The government can raise taxes. Now it is collecting tax from Myanmar expatriate workers. It should be done as well. But instabilities affect production. The ability to pay taxes is reduced. That's something you should think about. Another thing is to watch how the Central Bank will supply." he said.

While people are waiting in line to buy fuel

The China-Myanmar border trade has almost been suspended for over a month due to the battles breaking out in northern Shan State. Therefore, businessmen point out that there may be a deficit in trade as well. 

According to a statement released by the Ministry of Commerce, there has already been a trade deficit because the volume of imports is greater than exports in the China-Myanmar border trade this year in comparison with the same period last year. 

Despite being able to export goods worth more than 1,543 million US dollars from April to 1st December of the 2022-23 budget year, Myanmar was able to export goods worth 1,430 million US dollars only during the same period of the 2023-24 budget year. 

However,Although Myanmar imported goods worth 277 million US dollars during the same period in 2022, the goods worth 988 million US dollars were imported this year, according to the Ministry of Commerce. 

Trade deficit caused the demand for foreign currency. So, difficulties relating to the fuel which is imported from abroad have arisen in the country, pointed out businessmen.

So, the government was carrying out a plan to put the foreign currencies which have illegally arrived in Myanmar into legal accounts, an anonymous businessman told CNI News.

While seeing an armed force

" The main problem that has resulted from the trade deficit is the fuel crisis. When the foreign currency is in demand, as the Central Bank can't sell the US dollar, it's been difficult in the fuel business. We need foreign currencies on the list that can be legally accepted. But all the dollars that you have cannot be remitted to a Singaporean Bank because there are accounts that are banned or blacklisted. There is black money in every country. Mainly, it's a bit difficult for payment if trade has not been legally done. We need to send a lot of dollars to Singapore so that we can buy things with accounts." he said.

For example, if goods worth 100,000 dollars were exported, fuel worth 100,000 dollars could be bought, he explained.

" For example, Myanmar has exported goods worth 100,000 dollars, fuel worth 100,000 dollars can be imported from abroad. There are dollars earned illegally not through official trade. You cannot put these dollars in the market. They are the money the government has controlled. As it would be convenient if there are exports, it's necessary to buy exports a lot. Buying a lot of exports is not because of wanting money but to get legal money." he added.

Successive governments often counter the budget deficit by borrowing from the Central Bank, selling Treasury bonds as well as borrowing from abroad. Although there are trade deficits and budget deficits every year, they have not reached a serious situation. 
However, it might be difficult to import goods from abroad if the budget deficit comes to increase.

If it is difficult to import the fuel that the public essentially has to be using, the commodity prices surely will rise. So, the government needs to systematically settle the problem, said economic commentators.