This will help meet the urgent balance-of-payments needs arising from the covid-19 pandemic, especially the government’s recovery measures to ensure macroeconomic and financial stability while supporting affected sectors and vulnerable groups.
"Myanmar’s economy is suffering from a second covid-19 wave, resulting in extensive lockdowns, declines in tourism, and supply chain disruption," Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said in a press release on Wednesday.
This is the second IMF emergency financial assistance under the RFI/RCF for Myanmar since the outbreak of the pandemic: on June 26, 2020, the IMF Executive Board approved a disbursement of US$ 356.5 million (see IMF Press Release No. 20/247 ).
The additional financing brings the total IMF financial assistance provided to Myanmar to address covid-19 pandemic to about US$ 700 million.
While the impact of COVID-19 outbreak was less severe than expected, the second wave of the pandemic had hit Myanmar hard, inflicting large economic and social costs and straining the frail healthcare system.
Economic growth is projected at 3.2 percent for FY2019/20 (starting October 1), a sharp decline from 6.8 percent in FY2018/19.
For FY2020/21, growth is expected to fall to 0.5 percent. The economic fallout will be felt disproportionally by lower income groups, SMEs, and those in conflict regions.
Growth is expected to rebound to 7.9 percent in FY2021/22 reflecting the gradual recovery and strong base effects.
At the same time, permanent losses in medium-term output are expected, raising concerns of increased poverty.
In response to the second covid-19 wave, the government is formulating the Myanmar Economic Recovery and Reform Plan (MERRP).
The plan builds on last April’s emergency relief measures under the Covid-19 Economic Relief Plan (CERP), which aimed at preserving macroeconomic stability and mitigating the impact of the pandemic on the population.
The MERRP extends relief measures while adding macroeconomic and financial stability measures to guide the recovery.
The IMF emergency assistance, together with additional external support and the Debt Service Suspension Initiative, would cover higher social spending needs under continued strains on revenues and mitigate the risk of excessive monetary financing.
"The Rapid Credit Facility and Rapid Financing Instrument will help address Myanmar's urgent financing needs related to the covid-19 shock," Furusawa stated.