Economy The government is currently considering a further reduction in the country’s interest rates, which would allow local businesses to compete against international rivals, according to sources from Parliament. According to the Central Bank of Myanmar, current interest rates are 10% for loans and 8% for savings, which could potentially be reduced to 6% and 4% respectively. If the rates are reduced, this would be the third such change since President U Thein Sein took over as President. On average, international interest rates in developed markets are 2.5-3%. U Than Lwin, an advisor to the Ministry of Finance and Revenue, stated that businessmen have been taking advantage of Myanmar’s high interest rates by borrowing money in other jurisdictions at low interest rates and depositing it in Myanmar banks. Lower interest rates would potentially benefit local SMEs by allowing them to borrow money at rates that would still allow for profitably. But there are potential downsides to an interest rate change as well. Myanmar’s money circulation would likely be affected as a result of less deposit activity in Myanmar banks. Inflation also remains a concern. If inflation stays high, reduced interest rates will make deposits even less attractive which would affect lending.
Posted on: Fri, 21 Jun 2013 05:01:38 +0000
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