Economy of Burma low before strikes

Press, 6 October 1988, Page 45

Economy of Burma low before strikes

By

KEVIN COONEY

NZPA-Reuter Bangkok The economy of Burma was already in tatters before the latest demonstrations and strikes and Western diplomats doubt the Government has enough money to keep soldiers supplied with bullets for long. “I think their foreign exchange is literally used up by now," a Rangoonbased Western ambassador said by telephone. "I don’t think there has been a grain of rice exported for the last three months and not much for the previous nine months either. "Whether any teak has been exported I doubt, certainly not in the last three months.” Declining prices for these commodities, an otherwise stagnant gross domestic product and the heavy burden of servicing a SUS 4 billion ($6.5 billion) foreign debt forced Burma to seek United Nations classification as a “least-developed developing country” in 1987. With a per capita annual income officially estimated at SUS 264 ($429) for the fiscal year ended April 1, 1988, Burma won its classification, and future debt relief. After 25 years of rule by authoritarian Ne Win

and his Burma Socialist Programme Party, Burma, once the world’s leading rice exporter, was officially listed as one of the 10 poorest countries in the world. This poverty and political repression gave birth to this year’s student protest movement. When soldiers opened fire on students in August, killing thousands according to Rangoon doctors, the whole nation went on strike, shutting down virtually every industry and Government department. Even before the strikes, the official estimate for real growth in gross domestic product for the 1988-89 fiscal year was only 2.3 per cent, and independent economists had expected the economy to expand by between one and two per cent. “I think at the moment the coffers are literally empty,” a diplomat said. “I have no idea what their stocks of ammunition are, but it is essential supplies of that kind will become a strain unless they can get a reasonable degree of normality. Economic reforms introduced earlier this year to give farmers some free-market motivation had been expected by the Government to bring growth in the agriculture

sector of 2.8 per cent, after a decline of 0.3 per cent in 1987-88. The Government had estimated a nominal 18 per cent decline in public capital spending for 198889 to about SUSI billion ($1.62 billion). This decline did not take into account a 30 to 40 per cent inflation rate or the cut-off of foreign aid after the army seized power on September 18 and once again used force of arms to quiet dissent. The Government had estimated that 34 per cent of capital spending would be financed by foreign aid. West Germany, which has been contributing SUSBO million ($l3O million) annually, Japan, giving SUS6O million ($97 million), and the United States, SUSI2 million ($19.52 million), have all suspended donations until the political situation improves. “Arrests of students, as well as the completely bare-faced shootings that are still going on quite casually if you happen to be in the wrong place, I think will make Governments very hesitant about resuming aid,” the diplomat said. Economists have estimated that Burma’s foreign reserves in recent years have been at the level of one month’s imports.