Myanmar for much of the period had a centrally planned semi-autarkic economy, which it opened up and reformed slowly, awkwardly and inefficiently in the 1990s and 2000s, before moving to loosely structured discretion in deeper reforms from 2012.


Targets and attainment



monobank financial system in largely autarkic economy with multiple but not comprehensive controls, where all large (but not small) enterprises are state-owned and monobank provides credit to public sector, economy now experiencing some limited opening and liberalisation; exchange rate fixed to USD, then from 1975 (with effective devaluation) to SDR; 1976 monobank split into central and three (state-owned) commercial banks with varying remits, which start to recruit staff and open new branches; tax reform 1976 cuts overall public sector deficits and domestic (monetary) financing, but the latter remains typically large; further devaluation 1977; SOEs now paying interest on their working and investment capital, at new rates from 1977, while banks lending to fund rice production also charge interest; 1985 demonetisation of banknotes amounting to c. 50% of currency in circulation (stated aim is to uncover black money of profiteers and hoarders, but it has temporary downward effect on inflation also); long expansion petering out by 1986 in lower growth and faster inflation, and growing parallel goods and forex markets with wide and rising spreads over official prices and rates; second demonetisation 1987; recession 1987-8 and political unrest, new government 1988 commits to liberalisation which turns out to be limited; fourth state bank set up 1989 to service foreign investors; late 1989 interest rates raised (first time since 1977), but economic role offset by changes to SOE financial arrangements; statistics need major improvements in quality and availability

multiple direct controls MDC



economy significantly less centrally planned but still far from standard market economy; official exchange rate unchanged and heavily overvalued (by early 1992 parallel forex rate is 15 times official rate), but various devices allow private sector trades at rates close to those in parallel market; 1990 credit starts to be allocated in principle on basis of borrower creditworthiness and project viability instead of plans and directives; central bank given various legal powers by new law, but operates basically as part of Ministry of Finance; monetary expansion continues to be determined primarily by public sector deficits; private banks allowed, and set up, from 1992; 1995, 1996 interest rates raised, and Treasury Bonds issued; 1996 sharp further depreciation of parallel rate, some resort to direct controls; IMF repeatedly presses for comprehensive reforms, above all exchange rate unification and fiscal reforms, but authorities resist, waiting for expected surge in natural gas production and exports (which turns out to be only a partial solution); growing international sanctions against anti-democratic government actions; doubts about official GDP data (which show very fast growth); 2003 crisis of private banks (now significant share of banking system), which takes time to sort out; by 2006 parallel forex premium is c. 20,000%; 2008 cyclone causes significant loss of life and damage, but GFC has less effect; bond issues cover part of fiscal deficit from 2009, with plans to develop capital market, limited steps taken in 2010; statistical base according to IMF “inadequate for effective surveillance”: published data not timely, reliable or consistent

unstructured discretion UD


2012 (amid political thaw) exchange rate unification with managed float, plus interbank forex market; 2013 new central bank law providing some autonomy; central bank operates deposit auctions to drain liquidity and starts reserve money targeting; Treasury bill auctions from 2015, Treasury bond auctions from 2016, but initial reluctance to allow interest rates or exchange rates to move freely; statistical data remain patchy, slow and unreliable

loosely structured discretion LSD

Selected IMF references: RED 1974 pp1-8, 35 64; RED 1976 pp27-8, 36-9; RED 1979 p26; SR 1979 pp2-3; SR 1984 pp12-13; RED 1987 pp30, 32; SR 1987 p2; RED 1988 p32; SR 1988 pp9-10; RED 1989 pp1-2, 30-1, 34-5; SR 1989 pp8-9; SR 1992 pp1-2, 3, 4-5; RED 1993 pp13, 15; SR 1993 pp1-7; SR 1994 pp10-11, 12-13; RED 1995 p14; RED 1997 pp25-6, 36; SR 1997 pp9; REDSI 1998 pp20-2, 24-5, 32-3, 43; SR 98 pp10-11; SR 2002 p6; SR 2004 pp6, 9, 18; SR 2005 pp14-16, 17; SR 2006 pp6, 12, 14-15; SI 2007 pp2-5, 17-20; SR 2010 pp7-8, 9-12; SR 2011 pp5-6, 7-10; SI 2012 pp3-9; SR 2012 pp4-7; SR 2013 pp5, 7, 10, 11-14; SR March 2014 p5; SR September 2014 pp7-9, 14-16; SR 2015 pp8-9, 19; SR 2016 pp10, 20; SI 2017 pp3-13; SR 2018 pp13-15; SR 2020 pp14-16, 39-41.

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