IMF praises Myanmar's reform efforts

The International Monetary Fund praised Myanmar's economic reform efforts Tuesday, saying it had met key targets for strengthening its finances and reforming management.

It said the economic outlook for the Asian country is good, forecasting growth in fiscal 2013-2014 to rise to 7.5 percent and near 7.8 percent the following year.

But it warned of the need to get inflation under control and to build up foreign reserves.

"Myanmar is undergoing an exciting transition," Matt Davies, leader of a review team, said in a statement.

He cited the sweeping reforms that included removing exchange restrictions and adopting a floating rate for the kyat in the past year; the establishment of an autonomous central bank; and large increases in government and spending on health and education.

"The authorities aim to build on these gains and achieve sustained, strong, and inclusive growth," he said.

The Fund said the government, trying to rapidly rebuild an economy after being isolated for decades under a military dictatorship, had met most of its fiscal and financial targets of the past year.

The IMF said the current target of keeping the deficit below 5 percent of GDP was appropriate, but that tax revenues remain too low and the tax base too narrow.

It also said Myanmar still needs several years of sustained reform to modernize the country's financial sector, stressing close oversight of new policy banks set up by the government "to ensure they are managed soundly and to minimize fiscal risks."

The Fund said it is ready to continue helping the Myanmar government with reforms through policy advice, progress monitoring and tailored technical assistance to help it build capacity for managing the economy.