Myanmar had a strong economic take offbetween 2011 and 2015, but sustaining it will depend onimprovements to public services and infrastructure. Yetgeneral government spending at 15 percent of gross domesticproduct (GDP) is much lower than what is needed to deliverthese improvements, and well below countries at a similarlevel of development that spend over 20 percent of GDP onpublic services. The first public expenditure review (PER)for Myanmar found that since the country opened up in 2011,it moved quickly to allocate considerably more resources topriority public services. Macroeconomic challenges in thepast two years have contributed to deteriorating fiscalconditions. Part of these challenges are structural -Myanmar is dependent on commodity receipts, is prone tonatural disasters, and has a narrow production base. Thesechallenges are exacerbated by policy and institutionalcapacity constraints. Fiscal buffers are limited by lowrevenue (10 to 12 percent of GDP), with considerableeconomic activity in either hard-to-tax sectors or dominatedby small and micro enterprises. On the potential forreallocating resources, the PER analyzes: (i) the allocativeefficiency of capital expenditures, to identify options forreprioritizing spending to higher-valued use, and theproductive efficiency of capital expenditures, to minimizewaste in project implementation; and (ii) the fiscal impactof state economic enterprises (SEEs) to present a strategyfor the government to maximize returns from and minimizesubsidies to SEEs.
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