Going forward, the government should be able to further increase expenditures in priority areas in the context of an overall growth in the level of real public expenditures. In this regard, a comparison of Myanmar with neighboring countries shows that the ratio of public expenditures to GDP has been increasing but is still below the ratios prevailing in other countries (Table 1). But, whether and by how much real public expenditure can increase will depend on the possibilities for revenue expansion (Section III). It is of vital importance for macroeconomic stability that the government maintains its commitment to keeping the budget deficit at no more than 5% of GDP.2
Table 1: General Government Expenditures
(% of GDP)
2008 2009 2010 2011 2012
Myanmar 8 9 10 10 17
Cambodia 16 20 20 20 19
Indonesia 21 18 18 18 19
Lao PDR 19 23 23 21 22
Malaysia 28 32 28 29 30
Philippines 19 20 19 18 19
Thailand 21 24 23 23 24
GDP = gross domestic product, Lao PDR = Lao People’s Democratic Republic.
Note: The large increase in general government expenditures as a percent of GDP between 2011 and 2012 in Myanmar is mainly a result of the exchange rate reform and the considerable depreciation of the kyat, which in turn significantly increased the value of government expenditures with high import content.
Sources: World Bank 2012; IMF (2012, 2013, and 2014).