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Restructuring the State Budget System for Disinflation and Exchange Rate Unification in Myanmar

Discussion Papers

No.320

January 2012

ABSTRACT

The installment of a new government has augmented the prospect for implementing disinflation and exchange rate unification in Myanmar. A close look at the state budget shows that the reform of the budget system for state economic enterprises (SEEs) is essential. Reforms need to hold the replacement of controlled prices including the official exchange rate with market prices in SEE operations, and the separation of the SEEs from the state budget. But separating the SEEs from the state budget will necessitate careful planning to cope with SEE bankruptcies which would imposes another fiscal burden on the government. Therefore, economic viability must be a criterion for the continuation of their operations.

Keywords: Myanmar, state economic enterprises, disinflation, exchange rate
unification
JEL classification:H61, O24, O53

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