Interview: U Kyaw Win
What are the main obstacles to the successful implementation of the Public Finance Management (PFM) Reform Strategy?
U KYAW WIN: Myanmar’s PFM Reform Strategy underscores the government’s strong commitment to continuing reform by addressing challenges the country has faced over recent decades. To strengthen institutional capacity, the government is implementing a number of measures that seek to improve our human capital and the transparency of our budgetary process, and to foster decentralisation and the development of a more consultative decision-making process through greater parliamentary oversight and continued dialogue with the private sector. In this way, the successful implementation of the PFM Reform Strategy will require a mindset change from all public sector workers, both at the Union and subnational level, in addition to the improvement of our bureaucracy’s technical capacities.
Implementation will be a long-term process during which we must overcome multiple obstacles, including the generally low level of funds disbursement, delays in public procurement which often contribute to further delays in the implementation of key projects and infrastructure development, and legacy issues that we carry forward from the previous administration. Despite the challenges at hand, progress is being achieved in many areas, as the preparation of the new legal framework for public procurement to allow a more efficient, cost-effective and transparent process clearly demonstrates. In the end, the successful implementation of our PFM Reform Strategy will also catalyse progress in other crucial areas by increasing spending on health, education, infrastructure and energy.
How will reforms allow Myanmar to tap debt markets in order to finance budget deficits?
KYAW WIN: The government is currently financing its budget deficit through domestic borrowing. Concessional loans as external borrowing are primarily used for our country’s priority development projects, whereas Treasury bonds and Treasury bills are being issued for domestic financing. There have been Treasury bill auctions operating twice a month since January 2015, and Treasury bond auctions have been taking place once a month since September 2016. There are currently no plans to issue foreign currency bonds.
To allow Myanmar greater access to both domestic and international debt markets so as to finance budget deficits, public awareness, the expansion of our investors base, and the development of secondary and repo markets are required. Myanmar is continuing to explore the process of securing a sovereign debt rating to create a clear benchmark from which both public and private sector securities will be issued.
What are the most effective vehicles for the government to increase tax revenue?
KYAW WIN: It is critical to enhance the transparency of our tax system in order to expand our tax base. To achieve this, we need to take concrete steps to educate the general public on how their taxes are used. As our state counsellor has noted, paying their fair tax share is one of the most effective ways for our citizens and businesses to contribute to Myanmar’s development.
Just as paying taxes is both a civic obligation and a central element to the social contract between the citizens and the state, our ministry is likewise obliged to make tax payment a simple task. Myanmar needs to fix its inefficient tax collection system, and tackle elite tax avoidance and corruption. The lack of meaningful reform in recent decades makes Myanmar the country with the lowest tax revenue in the region: approximately 7.5% of GDP. However, we expect a steady revenue increase in the coming fiscal years as a result of Myanmar’s three-prong revenue mobilisation strategy that seeks to improve tax administration, enhance tax compliance and channel revenue from natural resources into the budget with transparent reporting practices.
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