If the CBM reduces the current deposit rate from 8 percent to 7 pc and current borrowing rate from 13 pc to 11pc, “it can help to boost the economy by reducing the cost of debt for businesses, which, in turn, will lead to growth, development and more job opportunities,” Daw Thet Thet Khaing said.

She added that it will increase the competitiveness of businesses owned and run by Myanmar nationals and raise income per capita and consumer spending, ultimately resulting in a boost to GDP. 

Reducing interest rates to that level will also help lighten the government’s local debt obligations, as it will reduce its borrowing costs without doing too much harm to savers who deposit their money in the bank, she said. As its bond markets still lack depth, the government has typically borrowed money from the CBM. 

According to the interim budget for April-September 2018, the government’s local debt balance stands at K18.02 trillion until March 31, 2017, with total interest and administration charges outstanding on the debt up to more than K800 billion in the 2016-2017 fiscal year from around K600 billion in 2015-2016. At those levels, local debt represents 22.3 pc of Myanmar’s GDP. 

As the State is also responsible for many ongoing and upcoming public projects, the ministries need to repay debt and manage their spending carefully so that the government does not end up paying off its local debts with taxes collected from the public, said Daw Khin San Hlaing MP from Pale constituency.

Source: https://www.mmtimes.com/news/reduction-interest-rates-discussed-parliament.html