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Trends, challenges and Opportunities for Resource Mobilization in Myanmar for Sustainable Development
6‐12‐2018
Outline
Revenue and expenditure and Financing Trends Challenges for resource mobilization in Myanmar Opportunities Future Plan
0.21% 1.07% 1.24% 2.10% 2.16% 1.27% 3.73%
27.02%32.65%
39.72% 40.08% 43.82% 44.29% 43.00%
58.70%54.80%
49.79% 46.18%44.56% 44.59% 43.82%
9.57%10.27% 8.72% 10.36% 9.04% 9.66% 9.33%
4.50% 1.20% 0.53% 1.28% 0.43% 0.19% 0.13%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
2012‐2013 (PA) 2013‐2014 (PA) 2014‐2015 (PA) 2015‐2016 (PA) 2016‐2017(PA) 2017‐2018(TA) 2018‐2019 BE
Percen
tage on To
tal Re
venu
eTypes Revenue and their Composition
Foreign Grants Tax Revenue State owned Economics Organizations Revenue Other Current revenue Capital revenue
Consolidated Public Sector Revenue as share of GDP
2015‐16 PA 2016‐17 PA 2017‐18 TA 2018‐19 BEGrants 0.45% 0.45% 0.24% 0.63%Rent (tax levied on use of state own properties) 1.31% 1.27% 1.16% 0.83%Taxes 6.58% 7.27% 6.74% 5.74%Social contributions 0.07% 0.09% 0.10% 0.09%Other revenue (including SOE Revenue) 12.29% 10.92% 9.97% 8.81%
Types of Revenue
Function of Public Sector Expenditure (consolidated)
0.000
1,000,000.000
2,000,000.000
3,000,000.000
4,000,000.000
5,000,000.000
6,000,000.000
Kyats in M
illion
Function of Government
2015‐16 2016‐17 2017‐18 2018‐19
Public Sector Expenditure (consolidated) as Share of GDP
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Percen
tage of G
DP
2015‐16 2016‐17 2017‐18 2018‐19
Ratio of Recurrent expense and Capital Expenditure
65% 69% 69% 63%
35% 31% 31% 37%
0%
20%
40%
60%
80%
100%
120%
2015‐16 (PA) 2016‐17 (PA) 2017‐18 (TA) 2018‐19 (BE)
percen
tage
Recurrent Expense Capital Expenditure
Financing for Government Expenditure
755.2 782.1
3005.0
1892.6 2095.6
4777.7
465.6 402.6
796.5
635.5789.3
2115.9
0.0
1000.0
2000.0
3000.0
4000.0
5000.0
6000.0
7000.0
8000.0
2013/14 (PA) 2014/15 (PA) 2015/16 (PA) 2016/17 (PA) 2017/18 (TA) 2018‐2019 (BE)
Kyat in
Billion
Domestic Financing Foreign Financing
Challenges in Resource Mobilization
Tax Revenue are stagnant in percentage of GDP Inadequate taxpayer services State Owned Economic Organizations Revenue are declining. Some ministries are underspending Need to educate oversighting agencies to reform consequences for
sound administration low levels of staff capability Weak of coordination and standardization of data interchange
across various government systems Insufficient resources for reform activities Balancing between higher need of resources for MSDP and Debt
Sustainability
opportunities• Myanmar government have already set up Myanmar Sustainable Development Plan (MSDP) with 3 pillars, 5 goals and 28 Strategies and 251 Action Plans
• All Ministries are making efforts for the implementation of MSDP.• Goal 2 Economic Stability & Strengthened Macroeconomic Management• In order to achieve this goals, Ministry of Planning and Finance have organized Macroeconomic Management Sectoral Coordination Group
• In this group, MOPF and CBM have established five implementation teams, • Central Bank and Ministry of Planning and Finance Coordination team• Revenue Forecasting and Monitoring Team• Medium Term Fiscal Framework Team• Expenditure Management Team• Financing and Risk Management Team
MSDP and PFM Reform StrategyTeam MSDP PFM Reform Strategy
CBM‐MoPF Coordination Team Strategy 2.1: Effectively manage the exchange rate and balance of payments Strategy 2.2: Reduce inflation and maintain monetary stability
‐ Reviewing Current function of CBM and task sharing among CBM, Treasury Department, MEB and Budget Department for linking with Monetary and Fiscal Policy
Revenue Forecasting and Monitoring Team
Strategy 2.3: Increase domestic revenue mobilization through a fair, efficient and transparent taxation system
‐ Applying simplified technologies‐ Amendment of taxation laws (in accordance
with fiscal policy) and regulations ‐ Opening medium taxpayers’ office
functioning on SAS‐ Centralization of processing, taxpayers
services and telephone management ‐ Installation of required software ‐ Promote automatic import and export
declaration system
MTFF Team Strategy 2.4: Strengthen public financial management to support stability and the efficient allocation of public resources
‐ Deepen the Top Down budgeting and integrate with bottom up Budget requested by ministries
• MSDP & PFM Reform Strategy (Con:)• Team MSDP PFM Reform Strategy Expenditure Management Team Strategy 2.4: Strengthen public financial management to support stability and the efficient allocation of public resources Strategy 2.5: Enhancing the efficiency and competitiveness of State Economic Enterprises ‐ Establishment of fundamentals to spend capital and current expenditures proportionally by improving out capital appraisal system and monitoring of capital spending ‐ To reduce SG and exercise yearly estimate ‐ Reviewing and arranging to enact and amend laws and regulations (financial, procurement, budgetary law, public debt law, etc.) ‐ Establishment of Public Finance Management Academy ‐ Applying simplified technologies ‐ To develop simple budget monitoring and evaluation framework to ministries and department along with budget planning and management guidelines ‐ To develop Public Finance Management Act ‐ To develop SEEs performance monitoring framework and make practice in SEEs ‐ Transparency of SEEs
• Financing and Fiscal Risk Management Team• Strategy 2.4: Strengthen public financial management to support stability and the efficient allocation of public resources
• ‐ Strengthen operations of TD on cash and debt management along with improving financial reporting ‐ To develop simplified technologies in collecting and compiling financial information and reporting as well as develop financial reporting rules ‐ To promoting and harmonizing cash management and debt management ‐Reviewing and arranging to enact and amend laws and regulations (financial, procurement, budgetary law, public debt law, etc.) ‐ Implementation of Core Banking System in
Team MSDP PFM Reform Strategy
Expenditure Management Team
Strategy 2.4: Strengthen public financial management to support stability and the efficient allocation of public resources Strategy 2.5: Enhancing the efficiency and competitiveness of State‐owned Economic Enterprises
‐ Establishment of fundamentals to spend capital and current expenditures proportionally by improving capital appraisal system and monitoring of capital spending
‐ Applying simplified technologies ‐ To develop simple budget monitoring and
evaluation framework to ministries and department along with budget planning and management guidelines
‐ To develop Public Finance Management Act ‐ To develop SEEs performance monitoring
framework and make practice in SEEs
Financing and Fiscal Risk Management Team
Strategy 2.4: Strengthen public financial management to support stability and the efficient allocation of public resources
‐ Strengthen operations of TD on cash and debt management along with improving financial reporting
‐ promoting and harmonizing cash management and debt management
‐ Implementation of Core Banking System in MEB
MSDP and PFM Reform Strategy (Con;)
Term of reference for Revenue Forecasting Team
• To Collect comprehensive information on current and forecast revenue from the various business and / or revenue generating activities
• To Share information on and provide recommendations for appropriate methods for producing macroeconomic and revenue forecasts for different sectors of the economy
• To Assess the extent and impact of the losses from the revenue collection, including tax incentives
• To Share details information of best practice in obtaining supplementary evidence to offer insights into official data and to support economic and revenue forecasts
Term of reference for expenditure Management Team• To systematically scrutinizes budget proposal and monitor the expenditure • To reduce the gap between budget estimates and actual budget expenditure
• To examine the suggestion of public expenditure review and implement it • To analyze the weak executing rate ministries in quarterly basis, find the problem and solution
• To provide suggestion in order to support the strengthening of assumption in MTFF
• To support effective implementation of project with the establishment of Project Bank
Options for Improving Resources Mobilization• Expend tax base
• Rationalize Tax Incentives –estimate costs, consolidate in one legislation, move to cost based and target by sector Consolidated list of incentives not available now. Legislative and administrative change needed toconsolidate provision of incentives and ensure role of Revenue Forecasting Team in estimating costs. Rationalizing tax incentives could help to increase Myanmar’s CIT tax productivity
• Enhance compliance focus – by focusing on risk based audits. The audits and compliance is focus on tax return filings at offices that are not currently under self ‐ assessment.
But More budget needed for enhanced compliance and audit capacity is a critical constraint.
The revenue gains from this change are also difficult to quantify.
• Reduce Tax exemptions ‐ It may require legislative changes (Tax law need to amend)Reducing exemptions of commercial tax and specific good tax will improve tax productivity.
• Furthermore tax payment system need to be able to use electronic system such as mobile payment system.
• Tax administration need to be more effective.
• Other revenue also need to identify whether it is tax or non tax. Because it is more easy to manage tax revenue then non taxrevenue.
• SEEs need to review and increased transparency and discussion on the sources and uses of these funds would enhance effective management.
• Set up Medium term Strategic Planning
• Set up framework for Monitoring and Evaluation System
Future Plan for effective Resource Mobilization
• Tax Administration and Procedures Law ( by 1 April 2019)
• Amendment of Income Tax Law
• VAT (Post 2021)
• System of Self‐Assessment Outcome by 2022
• Risk based compliance improvement strategies for improving filing, payment, reporting etc.
• Enhance and develop to cover all taxpayers and all tax types
• Streamlined processes and procedures
• New processes using by technology
• Enhance capacity for expenditure forecasting and planning at line ministries;
• Establishment of Projects Bank
• Enhance automation of manual data management processes (starting with budget submission and then monitoring and evaluation)
Thank You