IMF Support for SLORC

[simon_billenness@xxxxxxxxxxxx]

Dear Burma Activists:

I have just received a copy of a press story that appeared recently in the
Japanese press.

According to the story, the International Monetary Fund (IMF) is seriously
considering a package of assistance for the SLORC.  If this assistance is
granted by the IMF, it would greatly improve the SLORC's chances to attract
foreign investment. 

Since releasing Aung San Suu Kyi, the SLORC has been working hard to obtain
assistance from the IMF and World Bank. IMF and World Bank officials have
visited Burma in the last few months and have met repeatedly with SLORC
officials.

Ironically, the IMF appears to be giving the SLORC extra consideration for
its release of Aung San Suu Kyi even though she has specifically stated that
nothing has changed in Burma since her release and that governments and
corporations should not "rush" to invest in Burma.

The story names Japan, France, Germany and Switzerland as some of the
countries that support this assistance package. It should be noted that,
although the United States has opposed IMF and World Bank assistance to
Burma in the past, the United States represents only 18% of the vote on the
IMF Board.  Consequently, the IMF could approve the assistance package to
the SLORC over US opposition.

I would suggest that Burma action groups and concerned individuals in Japan,
France, Germany and Switzerland lobby and organize demonstrations against
their government to stop supporting IMF assistance to the SLORC. 

The Massachusetts Campaign for a Free Burma will deliver letters of concern
to the Japanese, French, German and Swiss consulates in Boston to protest
this action. We urge other Burma action groups to take similar action.

Please post details of your actions on Burmanet. Please email me directly if
you have any questions or ideas on how to move forward this new aspect of
the campaign for a Free Burma.

Simon Billenness
Massachusetts Campaign for a Free Burma

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Subject: Myanmar Central Bank Governor on IMF Aid

Source: Tokyo-based Japanese-lanaguage daily newspaper, NIHON KEIZAI SHIMBUN
21 October 1995 morning edition, page 7

Author: Katsuhiko Iino

Text: Myanmar (Burmese) Central Bank Governor Kyi Aye, in a 20 October NIHON
KEIZAI SHIMBUN interview, said that the International Monetary Fund's (IMF)
Board of Executive Directors has decided to provide assistance to Myanmar,
and has submitted a proposal to the IMF's Board of Governors. This is the
first time the IMF has formed a policy to assist Myanmar since the 1988
military coup took place in the country. It is said that the IMF appreciated
the progress in Myanmar's shift to a market economy and the release of Aung
San Suu Kyi, leader of the democratization movement, from house arrest. If
the Board of Governors approves the proposal, Myanmar's change to a market
economy is likely to be further accelerated, and the introduction of foreign
investment will be spurred as well.

According to Kyi Aye, the proposal submitted by the IMF's Board of Executive
Directors to the Board of Governors is a technical assistance program called
a "Fund Monitoring Program", in wich the organization will inspect Myanmar's
economic situation and compile the necessary proposals for structural
reforms and funding.

If the Board of Governors, wich will hold a meeting as early as within the
next two weeks, approves the program, the assistance program for Myanmar
will officially begin, and eventually open the way for financial aid to the
country. Kyi Aye, expressed confidence in the Board of Directors' approval
of the program, because 1) the program is "strongly pushed" by the Board of
Executive Directors, and 2) Japan, Germany, France, Switzerland and other
countries support Myanmar.

Myanmar has been trying to eliminate its double exchange rate, wich
constitutes one of the stumbling blocks for the introduction of foreign
investment. It has asked for IMF's assistance as a "safety valve," to
prevent inflation, which is anticipated in the process of solving the double
rate problem. Having two exchange rates -- an official exchange rate of 5.75
kyats per dollar, and a parallel exchange rate of around 120 kyats per
dollar -- is "a little incovenient for foreign investment," Governor Kyi Aye
stated. It also results in a radical reduction of the tariff rate in real terms.

While the Myanmar Government has clearly stated that it will aim at unifying
the exchange rate, it was concerned that the forcible implementation of the
unification policy would cause a steep increase in the prices of imported
goods and would therefore bring about inflation.

Kyi Aye expressed his concern about the high rate of consumer price
increases, which is 22 percent at present, and disclosed a plan to raise the
intervention interest rate, which is 10.5 percent at present, to over 13
percent as early as next month to control inflation and raise the savings
rate. At the same time, the Governor stated that the government takes the
rice price increase seriously, and thus, "It has decided to put priority on
the supply for domestic consumers and will export only surplus rice."(end)