Myanmar plans jump in health, education spending

By Aung Hla Tun
YANGON (Reuters) - Myanmar's government has proposed a budget for the 2012/13 fiscal year that would give a huge boost to the health and education sectors but still provides far greater resources for the armed forces.
The military, which ruled Myanmar for almost five decades until a nominally civilian government took office in March last year, will receive a budget of 1.87 trillion kyat (about $2.3 billion at the widely used black market rate).
That is 14.4 percent of the total 13.04 trillion kyat budget for the year starting from April and 36 percent higher than last year. The total budget will increase 63 percent from the current year's 7.98 trillion.
Health would get 368 billion kyat, four times as much as the 92 billion in the last budget, while spending on education would almost double to 617 billion from 310 billion, according to information provided to Reuters by senate member Aye Maung.
The proposal, which is in line with the government's reform agenda, could help win it support at home and boost Myanmar's case for a lifting of Western sanctions.
The government has many of the same generals, now retired, who ruled the country with an iron fist, spending large sums of money on the armed forces and little on schools and hospitals, but the new administration insists the welfare of its people is now its priority.
"It is important that the collection of receipts and allocation of public finance is in accordance with the desires of the people. It is necessary that the public is content with it," Finance Minister Aung Hla was quoted as telling legislators this week.
DECADES-OLD DEBT
For the new fiscal year, he is banking on 10.52 trillion kyat in receipts, leaving a 2.52 trillion kyat deficit. That compares with a projected 5.78 trillion kyat in receipts and a 2.20 trillion kyat deficit for the current fiscal year.
Dollar conversions from Myanmar's kyat currency are complicated by the country's two exchange rates: it has a fluctuating black market rate and an official rate that is barely used other than for some government data.
Myanmar is seeking help from the International Monetary Fund to unify its rates.
On Thursday, the kyat traded on the black market at about 820 to the dollar, compared with the official rate of 6 kyat.
According to the senator, Aung Hla also revealed that Myanmar owes some $11.02 billion in external debt run up decades ago, while its foreign currency reserves are a little over $7 billion.
Such data was rarely, if ever, published by the military governments that ran the Southeast Asian country under various guises since 1962, but the new government is doing its utmost to appear transparent as foreign investors knock at its door.
Hla Tun said that $8.41 billion out of the $11.02 billion in external debt was incurred during a socialist military regime from 1962 to 1988.
That included $6.39 billion owed to Japan, $802 million to the World Bank, $582 million to Germany and $357 million to the Asian Development Bank.
Debt run up after 1988 amounted to $2.61 billion, including $2.14 billion owed to China.
It was unclear if the totals included accumulated interest or whether the government was servicing any of the debt. The minister said that total foreign exchange reserves were $7.20 billion.
(Writing by Martin Petty; Editing by Alan Raybould and Robert Birsel)