MoeMaKa, July 19 2022
Political crisis, Next coming economic crisis of Myanmar
Throughout the past few months, along with the increase in world oil prices, fuel prices in Myanmar have gradually increased. From travel and freight, service industries that use fuel, to non-commercial sectors in healthcare and education, running operations are affecting due to rise in fuel prices. Over the past few weeks, global oil prices have fallen slightly, causing gasoline and diesel prices to drop back a few hundred per liter. It is not only cities like Yangon-Mandalay that use a large number of cars that feel the impact of the increase in fuel prices, but also the people in the remote areas need fuel to travel from one place to another, for powering agricultural irrigation and for driving tractors etc. They have to buy and use it at a much higher price than in Yangon and Mandalay. The increase in fuel prices has a big impact on not only the economy, but also education and health.
Again, the military council’s efforts to control and exchange foreign currencies are having a big impact in Myanmar. Today, the exchange rate of 1 dollar rose by more than 100 kyats to reach 2350 kyats per dollar. The military council set the fixed dollar exchange rate at around 1850, but the exchange rate outside is 2350 kyats, and the black market is expanding again, which could have a big impact on the economy.
Fuel prices, which have been falling for weeks, are now set to rise again as the dollar rises.
The orders and directives by the military council to control the dollar exchange would add further upheaval to the deteriorating economy. The military council often issued unsound orders and instructions on the dollar exchange market to convert the incoming US$ money into Myanmar Kyat within 24 hours. It may be due to the fact that the leaders of the military council saw the economic collapse of Sri Lanka and tried to control the dollars in the domestic economy and another possibility is that the military council lacks foreign reserves.
In Sri Lanka, the mismanagement of President Rajapaksa, who is oriented towards the prosperity of his own family and kinship, and not stopping terrorist attacks and covid infection have a big impact on foreign currency inflow as the country earns the most foreign currency from the world tourism business. This leads to even more hardships for the normal operation of the country’s economy. And due to the foreign currency crisis for foreign imports, fuel and gas could not be imported anymore. The country has fallen deeper into economic crisis. Education and the health services also came to a halt. The protest had finally stormed the President’s house.
The military council might be worried about such a situation coming to them, so controlling foreign currency is seemed to be their thinking for their way out from such situation. Or, unrelated to the Sri Lanka issue, due to the consequences of military expenses and becoming internationally isolated both diplomatically and economically, the foreign exchange crisis might have already happened.
Due to restrictions on controlling the spread of covid infection, the economy of many countries in the world has declined and as a result of the Ukraine-Russia war, the oil prices and commodity prices are increased. Myanmar has also suffered more or less. Attempts to control foreign currency by the military council in a situation where the country will continue to face the negative effects of rising oil prices may cause further problems.
In some political views, there may be assumptions that by using not only the armed movements and political methods but also taking advantage of current economic crisis, might be able end the military council from holding power in the same way happened to the president overthrown in Sri Lanka.