IMF sees stronger growth in Myanmar, but Rohingya crisis may hurt investment

Myanmar’s leader Aung San Suu Kyi arrived on her first visit to conflict-battered northern Rakhine State on Nov. 2. (AFP)
Updated 17 November 2017
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IMF sees stronger growth in Myanmar, but Rohingya crisis may hurt investment

YANGON: The International Monetary Fund (IMF) on Friday forecast an economic rebound in Myanmar this year, but said the Rohingya refugee crisis may dampen investment as the country faces international pressure over its treatment of the Muslim minority.
More than 600,000 Rohingya have fled to Bangladesh since late August, driven out by a military counter-insurgency clearance operation in Buddhist-majority Myanmar’s Rakhine State.
A top UN official has described the military’s actions as a textbook case of “ethnic cleansing.” Myanmar denies that.
While there is no sign of a major direct economic impact, the crisis has dented hopes of a Western investment boom as European and US companies are wary of the reputational risks of investing.
Last month, the World Bank froze $200 million in budget funding for Myanmar over the crisis.
“The internal conflict and humanitarian crisis in northern Rakhine State could affect development finance and investor sentiment, although direct economic impact appears to have been largely localized,” the IMF’s Myanmar mission chief, Shanaka Peiris, told reporters in the commercial capital of Yangon.
“Myanmar’s economy is rebounding and macroeconomic imbalances are stabilizing. Growth is expected to rebound to 6.7 percent,” he said.
However, the near-term growth trajectory was moderately weaker than previously expected, reflecting a subdued pick-up in domestic investment and uncertainty surround the Rakhine State crisis, particularly for tourism, he said.
The IMF had previously downgraded its gross domestic product growth forecast for Myanmar for 2017-2018 to 6.7 percent from 7 percent, but Shanaka said it still represented a “significant acceleration” compared with 5.9 percent from a year ago, thanks to a recovering agriculture sector and exports.
The government led by Aung San Suu Kyi had seen “a challenging first year,” he said, with lower-than-expected growth, but the medium-term outlook remained “favorable” as higher tax revenues could support growth.
Frustration over the government’s management of the economy has grown in recent months.
Foreign investment approvals have slowed since Suu Kyi’s National League for Democracy won an election in late 2015, and took office early the next year.
Still, Myanmar has enjoyed one of the fastest growth rates in the region after the military, which ruled for nearly 50 years, ceded power in 2011 to a quasi-civilian government that ushered in rapid reforms, including the relaxation of foreign investment rules in 2013-2014.
— REUTERS


Regulator unveils plan to monitor cryptocurrency threat

Updated 1 min 46 sec ago
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Regulator unveils plan to monitor cryptocurrency threat

  • “Monitoring the size and growth of crypto-asset markets is critical.." FSB says
  • Plan follows drive by central banks and regulatory bodies to keep cryptocurrencies at bay

GENEVA: A financial regulator on Monday unveiled a strategy to monitor whether cryptocurrencies such as Bitcoin pose a threat to world economic stability.
The plan follows on from a concerted drive by central banks and regulatory bodies to keep cryptocurrencies at bay.
In a statement, the Financial Stability Board (FSB), which oversees regulation among G20 economies, said it believes “crypto-assets do not pose a material risk to global financial stability at this time.”
But, the FSB added, the speed at which cryptocurrencies are spreading, the lack of solid data on their use and uncertainty over which rules apply in the sector should spur major economies to redouble their scrutiny.
“Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall,” the FSB said.
The framework also calls of an examination of whether cryptocurrencies are evolving from a method of paying for goods and services into a securities product, which individuals are holdings as a savings device instead of a stock or a bond.
The FSB also underscored “the scarcity of reliable data on banks’ holdings of crypto-assets.”
That point serves as a chilling reminder of the 2008 financial crisis, which was made worse by the fact that some banks did not know their level of exposure to securities backed by junk mortgages, even after those mortgages started to fail.
The FSB said an affiliate called the Basel Committee on Banking Supervision was “conducting an initial stocktake on the materiality of banks’ direct and indirect exposures to crypto-assets.”
It warned that the exposure of financial institutions to cryptocurrencies will serve as a key measurement of the “risks to the broader financial system.”
The FSB said it expects its plan will face hurdles from the outset, given the “data gaps” and “lack of transparency” in the sector, especially concerning the individuals trading coins on a daily basis.
The FSB, currently chaired by Bank of England chief Mark Carney, said it will formally present the framework to G20 finance ministers when they meet in Buenos Aires later this month.
The call for tighter monitoring follows major swings in the value of assets like Bitcoin and the constant emergence of new cryptocurrencies, which has raised fears that the unregulated and opaque market could pose a rising threat to investors.