4) WORLD BANK BURMA REPORT (EXTRACT

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MYANMAR: POLICIES FOR SUSTAINING ECONOMIC REFORM
 
WORLD BANK REPORT No.14062-BA
 
October 16, 1995
 
Country Operations Division
Country Department I
East Asia and Pacific Region
 
 
                            EXECUTIVE SUMMARY
                                    
                              F. CONCLUSION
 
50.    The Government's ongoing economic reform program has
changed many facets of the Myanma economy. To achieve the goals
of expanding exports, encouraging agriculture, and promoting
private-sector and foreign participation in economic activity,
several new laws and regulations have been instituted. However,
this report concludes that the pace of economic growth is still
not rapid enough to compensate for the economic stagnation of the
preceding quarter century, and its sustainability is uncertain.
The current reform efforts are, therefore, unlikely to push the
Myanma economy to a higher growth path on which the bulk of the
population would enjoy substantially better living standards.
 
51.    For a sustained growth response to emerge, this report
concludes that economic reforms need to be deepened and extended
in several policy areas.  The most urgent need is to restore
macroeconomic stability so as to establish the basis for
sustained growth.  In this context, the report's central
recommendation is for a nominal devaluation of the official
exchange rate.  Adjusting the exchange rate is essential to
tackling the unsustainably large macroeconomic imbalances with
regard to the fiscal deficit and the current account gap. These
distortions in macroeconomic policies, particularly the
overvalued exchange rate and the deep cuts in non-military public
expenditures, also have adverse distributional impacts. Unless
they are addressed, it will be impossible to reduce poverty and
achieve social development.  Substantial gains in economic
efficiency would also result if the ban on private-sector exports
of paddy and rice were eliminated, and the scope of government
paddy procurement were reduced.  Reforming these paddy policies
would help to reduce poverty and enhance equity because they
imply large income transfers from the rural poor to the urban
elites (including the military). Regarding private-sector
participation, SEs [State Enterprises] still enjoy significant
advantages in their access to key inputs and, thus, are also
favored by foreign investors in establishing joint ventures.
Hence, steps to establish a "level playing field" between SEs and
domestic private businesses should be a priority. Finally, if the
role of the SE sector in the economy and its adverse fiscal
impact are to be reduced, reforms would need to go further or be
reoriented in several areas, including price liberalization,
managerial and financial autonomy, and privatization.   
 
 ...............................................................
 
These paragraphs are taken from the 150-page report whose main
headings are:
 
1. POLICY REFORMS AND MACROECONOMIC ISSUES 
 
2. CHANGES IN THE INCENTIVE SYSTEM
 
3. STATE ENTERPRISE REFORM AND PRIVATE SECTION DEVELOPMENT
 
BIBLIOGRAPHY
 
ANNEXES
 
STATISTICAL APPENDIX