Myanmar: Govt releases economic stimulus plan to fight COVID-19

  • The Ministry of Planning, Finance and Industry (MoPFI) has issued a comprehensive economic stimulus plan (CERP) consisting of 7 goals, 10 strategies, 36 action plans and 76 actions that cover a range of emergency fiscal and monetary measures.
  • State Councillor Aung San Suu Kyi said that “tax revenue shortfalls cannot be downplayed, with anticipated revenue underperformance requiring reallocations of government spending to create space for COVID-19-related outlays, and policies.”
  • Among the ten goals is one which aims to ease the impact on the private sector through improvements to investment, trade and banking.
  • Under this goal, the MoPFI will increase the recently launched MYK100bn to small businesses in tourism and garment manufacturing to MYK200-500bn by end-2020.
  • The ministry will guarantee half of any new loans made by banks to enterprises generating a turnover of up to MYK1bn that are not beneficiaries of other schemes.
  • Government guarantees will also be extended to firms in high-growth sectors which have been affected by the virus.
  • In addition to deferrals of corporate income tax and commercial tax and waivers to withholding tax, waivers on Specific Goods Tax, customs duties and commercial tax for critical medical supplies related to the prevention, control and treatment of COVID-19 will also be granted.
  • Further fiscal stimulus measures will be announced “as soon as practicable.” These involve tax credits on wages, including deductions equal to 125% of wages paid, and investments on capital equipment.
  • Support will be provided to the banks, which have already been allowed to restructure existing loans extended to small businesses that regularly service their loans.
  • To ease the impact of potential non-performing loans (NPLs) on the banks, an asset management company through which potential NPLs will be held for 5-7 years will be established “as soon as practicable.”
  • Among other measures taken to encourage trade, a separate MYK100bn fund will be set up for designated commercial banks to provide trade financing for any product.
  • Cash or lending support will provided to smallholder farmers who have lost sales revenue or remittance income, to support input purchases in time for monsoon planting. After movement restrictions are lifted, rural cash-for-work programs will also be established.

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