Burma: Prioritiesfor Continuedgrowth Public Disclosure Authorized
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Report No. 3852-BA FILE COPY Burma: Prioritiesfor ContinuedGrowth Public Disclosure Authorized May 7, 1982 SouthAsia Programs Department Division C FOR OFFICIAL USEONLY Public Disclosure Authorized Public Disclosure Authorized Document of the WoridBank Public Disclosure Authorized This document has.a restricted distribution and may be used by recipients only in the performanceof their officialduties Its contentsmay not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS K 8.51 = SDR 1.00 K 7.30 = US$1.00 (approximate) WEIGHTS AND MEASURES Burmese Units English Units Metric Units. 1 viss (vi) = 3.600 lbs (.001607 lg ton) = 1.633 kg 1 pyi (1.302 vi) = 4.688 lbs (.002092 1g ton) = 2.127 kg 1 basket paddy (9.82 pyi) = 46.0 lbs (.0205 lg ton) = 20.9 kg 1 basket rice (16.0 pyi) = 75.0 lbs (.0335 lg ton) = 34.0 kg Except otherwise specified, years in the report and statistical appendix refer to fiscal years, as follows: October 1 - September 30 (up to September 1973) October 1, 1973 - March 31, 1974 April 1 - March 31 (from April 1974) PRINCIPAL ABBREVIATIONS AND ACRONYMS USED BRC - Burma Railways Corporation EPC - Electric Power Corporation EPEF - Export Price Equalization Fund FFYP - Fourth Four Year Plan (1982/83-1985/86) GOB - Government of Burma ID - Irrigation Department, Ministry of Agriculture and Forests IWTC - Inland Waterways Transport Corporation RTC - Road Transport Corporation SEE - State Economic Enterprise TFYP - Third Four Year Plan (1978/79-1981/82) 4 This report was prepared by a mission, which visited Burma in November/ December 1981, composed of M. de Melo (Chief of Mission), J. Berkoff (Senior Economist), K. Takeuchi (Senior Economist), and K. Uchimura (Economist). BURMA: PRIORITIES FOR CONTINUED GROWTH Report No. 3852-BA May 7, 1982 CORRIGENDUM Please amend the figures in Chapter V as follows: Page 89, Table V-4: for 1980/81 "Capital, n.e.i. (net)" should read -14 and "Overall Balance" should read 46. Page 90, line 6: change US$365 million to US$285 million. FOR OFFICIAL USE ONLY TITLE : BURMA: PRIORITIES FOR CONTINUED GROWTH COUNTRY : BURMA REGION SOUTH ASIA SECTOR : COUNTRY ECONOMIC REPORT TYPE CLASSIF MM/YY LANGUAGES 3852-BA CEM Restricted 05 82 English PUBDATE : 8205 ABSTRACT : Burma's economic performancehas improved dramaticallyin recent years, following a period of stagnation in the 1960s and early 1970s. This report reviews recent economic developmentsthrough 1980/81 and discusses the priorities for continued growth during the Fourth Four Year Plan period (1982/83-1985/86). It also focuses on long-termneeds for the developmentof exports and physical infrastructure. In this context, medium-term prospects for exports are reviewed, and some elements of a successful export strategy, including diversification,are discussed. The requirementsfor long- run infrastructuraldevelopment are explored for three key sectors: irrigation,hydroelectricity, and transport. The report provides estimates of Burma's aid requirementsfor the next two years and includes a short annex on Burma's health profile. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. BURMA: PRIORITIES FOR CONTINUED GROWTH Table of Contents Page No. List of Tables in the Text Country Data PREFACE SUMMARY AND CONCLUSIONS .................................. i I. RECENT ECONOMIC DEVELOPMENTS ............................. 1 GDP Growth ............................................... 1 Revitalization of Agriculture ............................ 3 Improved Capacity Utilization in Industry and Transport .............................................. 4 Recent Developments in Other Sectors ..................... 6 Growth in Real Investment ................................ 7 Balance of Payments ...................................... 8 Budgetary Performance .................................... 11 Money, Credit, and Prices ................................ 13 Conclusion ............................................... 15 II. PRIORITIES FOR THE MEDIUM TERM ........................... 16 Macroeconomic Targets for the FFYP ....................... 16 Agricultural Sector Growth ............................... 17 Further Improvements in Capacity Utilization and Productivity ........................................... 19 Investment Allocation .................................... 24 Domestic and Foreign Resource Requirements .... ........... 28 Conclusion ............................................... 32 III. EXPORT PROSPECTS AND EXPORT STRATEGY ..................... 33 Recent Developments ...................................... 33 Medium-Term Prospects .................................... 36 Diversification Strategy and Choice of Industries ........ 38 Measures to Promote Exports .............................. 42 Technical Note on Net Foreign Exchange Earnings .......... 49 Page No. IV. LONG-TERM DEVELOPMENT OF INFRASTRUCTURE .................... 52 A. Introduction .......................................... 52 B. Irrigation ............................................ 52 Background ............................................ 52 Modes of Irrigation Development ....................... 55 Issues in Irrigation Development ...................... 57 The Scale and Composition of the Investment Program ... 61 C. Hydroelectricity .......................................................63 Introduction ....... ............... .................... 63 The Power Market .................. .. .................. 64 Issues in Power Development ........................... 64 The Generation Program ............... .. ............... 67 Hydroelectricity Resources and Potential .... .......... 68 D. Transport ............................................. 73 Transport Demands .................. .. ................. 73 Organization of Transport in Burma ......... .. ......... 75 Transport Issues .................. .. .................. 77 Investment Priorities ................ .. ............... 81 V. ROLE OF EXTERNAL ASSISTANCE ............................... 84 Sources and Uses of External Funds ........................ 84 Balance of Payments Projections and Aid Requirements in 1982/83 and 1983/84 .................................. 88 Debt Service Burden and Terms of Borrowing .... ............ 92 Implications for the Government and Donors .... ............ 93 ANNEXES A. Burma Health Profile ...................................... 95 B. Irrigation Projects by Type ............................... 101 STATISTICAL APPENDIX ............................................ 108 MAP LIST OF TABLES IN THE TEXT Page No. Table I-1: Economic Indicators - Average Annual Change in Constant 1969/70 Prices ..... ................. 1 Table I-2: Sectoral Growth and Weighted Growth Rates at Constant 1969/70 Prices ...................... 2 Table I-3: Production and Utilization of Rice ............ .... 5 Table I-4: Balance of Payments Summary ....................... 9 Table I-5: External Debt ..................................... 10 Table I-6: Consolidated Public Sector Budget ............. .... 12 Table I-7: Annual Change in Domestic Credit .................. 13 Table II-1: Macroeconomic Targets in the Third and Fourth Four Year Plans ................................. 17 Table II-2: Public Investment Allocation Shares in the Third and Fourth Four Year Plans ................ 25 Table II-3: Projection of Real Growth Over the Fourth Four Year Plan (FFYP), 1982/83-1985/86 ............... 29 Table III-1: Value and Volume of Exports by Major Product Group ........... ................................ 34 Table III-2: Indices of Fluctuations in Commodity Prices 39 Table III-3: Export Unit Values of Selected Agricultural Exports .44 Table III-4: Exports of Rice: Quantity, Value and Unit Value by Product Category, 1980/81 .45 Table III-5: The Ratio of Average Export Price to Domestic Price, by Major Product in the Export Price Equalization Fund, 1976/77-1980/81 .47 Table III-6: Present Value of Net Foreign Exchange Earnings from a Copper Smelter/Refinery Project - An Illustrative Case .50 Table IV-1: Trends in Total Irrigated Area by Type of Irrigation. 54 Table IV-2: Irrigation Department: Budgetary Outlays 58 Table IV-3: Irrigation Department Personnel . .58 Table IV-4: Electric Power Corporation: Demand Forecast 65 Table IV-5: Generating Plant to Meet Future Demand: EPC 72 Table IV-6: Comparative Growth in GDP and Freight/Passenger Traffic in the 1970s . .75 Table IV-7: Freight Transport by Ownership and Mode, 1980/81 ............................... 77 Table IV-8: Indicators of Efficiency in State Transport Corporations .. 78 Page No. Table V-1: Gross Disbursements of Foreign Grants and Medium/Long-Term Loans, 1975/76-1980/81 ......... 85 Table V-2: External Debt Commitments, 1975/76-1980/81 ........ 86 Table V-3: Foreign Medium/Long-Term Loan Commitments by Purpose .......... ............................... 87 Table V-4: Balance of Payments Projections .... ............... 89 Table V-5: Aid Pipeline, 1980/81-1983/84 ..... ................ 91 Table V-6: Debt Service Projections ..... ..................... 93 ANNEX TABLES AND CHARTS Table A-1: Status of Health .95 Table A-2: Determinants of Health .96 Chart 1: Organization of Health Services in the Ministry of Health .98 Table B-1: Diversion Projects Operated or Proposed by Irrigation Department .101 Table B-2: Dam and Reservoir Projects Operated or Proposed by Irrigation Department .102 Table B-3: