Myanmar Spring Chronicle – November 23 Overview
(MoeMaKa) November 24, 2024
Economic Downturn Amidst Military Expenditures of Over 41,000 Billion Kyats
As armed conflicts rage across Myanmar, leading to a significant decline in agriculture, livestock, manufacturing, and service industries, the military council has increased its annual defense budget to over 41,000 billion kyats. This is despite the country experiencing a nationwide drop in production. Reports suggest this budget expansion, although not officially disclosed in detail, was revealed through discussions in some meetings.
Last year, the military reportedly spent over 30,000 billion kyats, according to BBC Burmese. Since the military coup, no official parliamentary sessions have been held to release formal budget figures. Observers rely on statements made during certain gatherings to estimate spending.
Widespread Economic Impact of Armed Conflict
Since the outbreak of armed conflicts in mid-2021, Myanmar’s agricultural sector has struggled due to disrupted operations. Border trade routes have been blocked, forcing goods to take longer and more expensive routes. Additionally, mandatory military service laws have driven many young people to seek work abroad, particularly in Thailand and Malaysia, depleting the labor force needed for production and services.
Traditionally, workers emigrated primarily from Mon State, Kayin State, Rakhine State, Shan State, and Tanintharyi Region. However, recent years have seen a surge in migration from central Myanmar, including the Ayeyarwady Delta, Yangon, Mandalay, and Bago Regions. This labor migration indicates a significant drain of human resources crucial to agriculture and production, further exacerbating the domestic economic decline. While remittances from overseas workers provide some income for families, the country’s overall economic machinery continues to weaken.
Disruptions in Key Sectors
Political instability and trade restrictions have severely impacted manufacturing and commerce. For instance, in coastal Rakhine State, armed clashes and restrictions imposed by the military navy have crippled the fishing industry. Additionally, skyrocketing fuel prices have made it difficult for businesses to operate efficiently.
In regions like Sagaing, Mandalay, Magway, Kachin, and northern Shan State, ongoing conflicts have prevented planting, harvesting, and transporting crops to markets. Farmers in Shan State, particularly in areas affected by late-2023 conflicts, face challenges in exporting produce to China, often resorting to longer, costlier detours.
The 2024 monsoon season brought widespread flooding to Mandalay Region, Bago Region, eastern and southern Shan State, and Kayah State, further compounding difficulties in agriculture and production. As Myanmar’s economic output declines, military spending continues to rise.
Shrinking Revenue and Increasing Military Expenses
The military council, which has lost control over tax collection in many areas, has significantly increased its defense budget compared to previous years. Since 2022, tolls and other taxes have dwindled, and many towns are now under the control of ethnic armed groups, local defense forces, and the NUG-backed resistance.
Revenue sources from natural resource-rich regions have also diminished. Areas such as Hpakant, Mogok, and Kanpetlet, previously generating substantial official and unofficial revenue, are now under the control of ethnic armed groups, leaving the military council with limited income.
Unsustainable Financial Practices
With declining revenue, the military council is left with fewer options to sustain its increased expenditures. Observers speculate that printing money to cover the deficit might be one of the few solutions left. However, such measures could lead to further inflation, exacerbating the country’s already dire economic crisis.