Myanmar needs to reduce bank interest rates to avoid finance speculation

Myanmar needs to reduce bank interest rates to avoid finance speculation

Published on Monday, 19 November 2012 21:54

Staff counting money at a remittance counter. (Photo-Win Myint Kyaw/EMG)

Myanmar's current inflation rate is 2.82 percent in 2011-2012 financial year and therefore, the government should reduce the bank interest rate, finance observers said.

Myanmar's current bank interest rate is 10 percent. The interest rate for deposited money is 8 percent and the interest rate for borrowing money, 13 percent.

"Businessmen coming from the countries of low bank interest rate borrow money from the banks in their countries and then save their money at Myanmar bank. They are taking advantage of the bank rate gap between the two countries. Myanmar's bank interest rate is higher than other countries. Therefore, the government should bravely reduce its bank interest rate," adviser-2 Than Lwin of the Ministry of Finance and Revenue.

"The independent management of the Central Bank of Myanmar plays an important role in operating banking services such as currency stability, laying down finance policies, bank interest rate changes, sales of bonds, local loan amount control and exchange rate control," retired professor Daw Yi Yi Myint of Institute of Economics reviewed.

"The inflation rate was more than 8 percent in 2010-2011. The inflation rate is around 3 percent. Therefore, the bank interest rate should be reduced. The interest rate for the deposited money should be 6 percent whereas that for borrowing money should be about 11 percent," a banking businessman reviewed.

"Myanmar's current inflation rate is about 5 percent and it is not possible to reduce the bank interest rate yet," vice-governor Maung Maung Win of the Central Bank of Myanmar said at the financial services workshop in September.

Although it is not possible to reduce the bank interest rate as the inflation rate is high, local businessmen are in preparation of reducing from 13 percent to 8.5 percent for borrowing money from the bank to be able to compete against the product market within ASEAN region, assistant director Aye Aye Win of Small-and-Medium Enterprises of the Ministry of Industry said.

Source: http://www.news.myanmaronlinecentre.com/2012/11/20/myanmar-needs-to-reduce-bank-interest-rates-to-avoid-finance-speculation/