THE International Monetary Fund has not provided any concrete help on Myanmar’s currency exchange rate unification yet, according to an official with the country’s commerce body.
An IMF delegation arrived in Myanmar in late October and has met with officials from the Central Bank of Myanmar, private banks, the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and other key business figures.
IMF mission chief Meral Karasulu said the visit to Myanmar was an Article VIII mission.
“This mission … is mostly of a diagnostic nature, to begin preliminary work to identify the legal framework and actual practices governing the current exchange system, including the multiple exchange rate system and the exchange restrictions on current international payments,” she said.
“The authorities requested this mission as part of their plans to unify the exchange rate and accept the Article VIII of the IMF’s Articles of Agreement,” she said.
Article VIII handles international transactions and exchange rates.
The IMF’s website says under Sections 2, 3 and 4 of Article VIII that members “undertake not to impose restrictions on the making of payments and transfers for current international transactions, and not to engage in, or permit any of their fiscal agencies to engage in, any discriminatory currency arrangement or multiple currency practice, except with IMF approval.”
Ms Karasulu said the six-member IMF team would meet government officials from a range of agencies, bankers and private sector representatives during the mission.
Dr Maung Maung Lay, a UMFCCI vice president, said the IMF would probably return in January or February to work on the exchange rate issue.
“The IMF comes every year to analyse the financial situation here. But I see the IMF as being a bit like a paper tiger because it couldn’t solve the problems in the United States or Japan,” he said.
“They dare not handle the exchange rate problem because nobody here, including the government, wants to take that problem on because it’s really tricky. Rice exporters can survive and make money when the US dollar exchange rate is about K800 but fisheries exporters lose money unless the rate is K900 or above,” he added.
However, economists and businesspeople are pinning their hopes on the IMF to find a way to unify the country’s multiple exchange rates and currencies without causing a financial meltdown.
“The new government took power in March and seems to be working hard to make the system more transparent, which is one reason that some officials wanted to meet the IMF delegation,” said economist U Maw Than, who is also a retired rector of the Yangon Institute of Economics.
He said that the government understood that the best way to control the market exchange rate was to manipulate the supply of foreign currency available.