Myanmar's government has published its first
ever Public Expenditure Review, which details recent ramp-ups in health and
education spending and outlines a range of challenges to improving public
spending.
The
Ministry of Planning and Finance and World Bank Group presented the report,
which analyses spending policies between 2009 and 2013, in Nay Pyi Taw
yesterday.
It shows
large changes in the Union budget’s composition in recent years. Between 2009
and 2015, general public services spending fell from 45 percent of the budget
to 11pc, social services rose from 10pc to 33pc, and defence from 21pc to 33pc,
the report said. Military spending still remains high and limits the “expansion
of other public services”, according to the analysis.
Data from
the Ministry of Defence indicates that military spending of 4.2pc of GDP was
planned for 2013-14, which is well above the 2.3pc average for countries at the
bottom of the middle-income range, the report said.
Defence
also consumed the largest portion of government spending on goods and services
between 2010-11 and 2013-14 and its consumption also grew faster than other
sectors – although the report notes large gains were also made in health and
education.
Government
revenue between 2009 and 2014, meanwhile, rose from 6pc of GDP to 11pc – thanks
to one-off measures like telecom licence sales and exchange rate devaluation,
and a wider tax base. General government expenditure nearly doubled over the
same period to 13pc of GDP, the report said.
The
period under examination also covers a fundamental shift in government budget
policy starting in 2011, as part of an effort to improve essential public
services, according to the report, which focused on education and health
spending.
U Kyaw
Win, minister for planning and finance, told media yesterday that the new
government will focus on improving education, health and social infrastructure.
“We will try to meet people’s social and economic needs in order to reduce poverty
in the country as much as possible,” he said.
Habib
Rab, senior country economist for the World Bank in Myanmar said the review,
which was finalised in September last year, had already informed budget
policies including on health and education, as the World Bank shared chapters
of it with the government even before June 2015.
The
country has historically spent less on education as a share of GDP than its
regional peers. Education spending fell to 0.7pc of GDP in the 2011-12 fiscal
year, the report said. Although this rose from 1.6pc in 2012-13 to 2.1pc in
2013-14, the ASEAN ex-Myanmar average is 3.6pc.
Weak
education spending has led to poor outcomes – only 460,000 out of 1.2 million
students starting in grade 1 eventually make it to grade 11, and over one
quarter of children at the end of grade 1 cannot read a single word, the report
said.
Another
result of low spending is that an unusually high share of total education
financing in Myanmar has come from households – around 63pc, according to a
one-off Integrated Household Living Conditions Survey carried out in 2009-10 by
the United Nations Development Programme.
But
public spending on education is rising fast, and quadrupled – from a low base –
between 2011-12 and 2013-14, according to the report. As a result, starting in
2012-13 the Union government “has likely replaced” private households as the
source of financing for education, although updated information on household
spending will only become available as part of household survey data collected
in 2015.
Measures
to ease the burden on households included abolishing primary school fees in
2013-14 and secondary school fees in 2014-15. The government also started to
provide free textbooks in 2014-15, and began improved stipend programs for the
poor and disadvantaged in 2015-16, the report said.
Meanwhile,
the increase in government spending has helped hire 79,000 more teachers, and
the Union government has delegated some spending authority to district and
township education officers and school heads through block grants.
But new
initiatives will require more spending. Myanmar’s basic education system
consists of only 11 years of schooling compared with 12 or 13 in the rest of
ASEAN, the report said. Adding an extra year of pre-school would cost an extra
K91 billion a year – a 12pc increase in the education budget – to hire the
necessary teachers and build new kindergartens. Keeping 322,000 students in
high schools for one more year would cost K58 billion a year, according to the
review.
The
volume of required spending is likely to be even higher if the government
focuses on higher-quality education, which in turn is unlikely to be achieved
without retraining teachers and equipping them with better textbooks and
teacher guides, the report said. The Ministry of Education will have to grapple
with delivering more despite a limited administrative budget, limited data to
inform spending priorities and fledgling capacity to analyse the links between
policy and budget priorities, the review concluded.
The
report tells a similar story for health spending, which was only $1.6 per
person in 2012, when out-of-pocket expenses accounted for almost 80pc of total
health spending. This has resulted in some of the lowest health outcomes among
ASEAN countries, but as with education, government spending has risen sharply.
Government
spending in the health sector increased nine-fold in the five years between
2009-10 and 2013-14, the review said. Ministry of Health spending on programs
with “public good” characteristics like nutrition, water and sanitation have
risen.
Beginning
in 2012-13, essential drugs and selected healthcare services were provided free
of charge to children, pregnant mothers and patients needing emergency surgery
under “certain circumstances in some facilities”.
The early
signs are that these steps are reducing prohibitive out-of-pocket payments by
households, said the review. The share of out-of-pocket payments fell from 82pc
to an estimated 60pc over the same period as the nine-fold rise in government
spending, the report said.
But a
lack of data still makes policy making and monitoring difficult, and
inefficient spending remains an issue, the review said. Even with the sharp
increase in spending, the country is failing to meet health targets.
The fact
that Myanmar is unlikely to hit Millennium Development Goals on child and
maternal mortality suggests that it “may want to consider increasing
significantly public funding of programs aimed at improving maternal and child
health”, the report said.
U Maung
Maung Win, permanent secretary at the planning and finance ministry, said the
report will support the government’s efforts to distribute the budget for the
benefit of the people.
“It will
help us to make systematic reforms where necessary and to budget efficiently,”
he told media at the report’s launch yesterday.
Mr Rab
said Myanmar would not produce a public expenditure review every year, but that
the Bank was due to start on a second review in July.
“We hope
it [the inaugural review] triggers more regular analysis of spending policies,”
he said, adding that the World Bank is encouraging the Ministry of Finance to
make public a database of fiscal spending that it built specially for the
review.
“You see
a huge shift in the culture of budgeting and public finance management,” said
Mr Rab.
“The budget
changed from being an administrative tool to an instrument to prioritise and
implement development policy.”
Htoo
Thant and Steve Gilmore
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.