Burma's Economy Facing Range of Pro

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Subject: Burma's Economy Facing Range of Problem

HEADLINE:  BURMA'S  ECONOMY FACING RANGE OF PROBLEMS

BYLINE: By Deborah Charles

DATELINE: RANGOON, March 2

 
   Although  Burma's  ruling generals
say their economy is booming, macroeconomic problems and
political uncertainty paint a much less rosy picture for the
economy, diplomats and economists said.

   Rising prices, growing international complaints about the
military regime and the threat of looming sanctions by the
United States have hindered economic progress, they said. Government
officials say  Burma's  economy is growing and on
the road to recovery after more than 25 years of declines under
an isolationist socialist policy.

   They say liberalisation efforts made since the State Law and
Order Restoration Council (SLORC) seized power in 1988 have been
beneficial as the economy opens up to foreign investment.

   Total approved foreign investment from 1988 to January this
year totalled about $ 5.36 billion from 237 projects.

   But economists estimate only about half of that has actually
been invested since SLORC opened up the economy.

   Some of the companies are awaiting more political stability
before beginning operations. The SLORC also continues to come
under international pressure for human rights abuses and for
failing to recognise a democratically elected government.

   Opposition leader Aung San Suu Kyi's National League for
Democracy won elections in 1990 but the SLORC never recognised
the result. 
   Others are waiting to see if the economy is on track, and
many economists say it is not.

   The International Monetary Fund (IMF) said in a report to be
presented to  Burma's  rulers on Wednesday that the economy was
still suffering serious macroeconomic problems and the SLORC
needed to adopt sweeping reform programmes to set it straight.

   "The macroeconomic situation has taken a marked turn for the
worse since April 1996," said the IMF report, a copy of which
was obtained by Reuters.

   "Foreign exchange reserves have fallen sharply, the exchange
rate in the parallel market depreciated by 40 percent in six
months and inflation has accelerated."

   Economic problems could spark political instability if left
unchecked, diplomats said.

   "The biggest problem is inflation, especially in the city,"
one Asian diplomat said, noting inflation is around 30-40
percent a year. "Incomes of people are still low and the lives

of ordinary people are still very hard."

   He said the SLORC could face political as well as economic
problems if prices continued to rise and the Burmese people were
unable to buy even staple goods.

   "As long as  Myanmar (Burma)  can produce enough rice there
will be no uprising. But if a problem occurs with rice maybe
people will turn to the streets," he said.

   "The government knows the potential problems, that is why it
is always trying to keep stocks of rice and stay in control. It
does not want unrest, especially now," the Asian diplomat said
noting that  Burma  was awaiting approval to become a full member
of the Association of Southeast Asian Nations.

   And the nagging fear adding to all the other problems is the
threat of possible economic sanctions by the United States.

   Washington has approved a bill for sanctions if the
political situation in  Burma  worsens, and some diplomats say
recent repression of the democracy movement led by Nobel Peace

laureate Suu Kyi is enough to trigger the law.

   Suu Kyi's movements have been severely restricted since
student unrest in December.

   "The main concern for companies...is economic sanctions,"
one diplomat said. "If the U.S. imposes economic sanctions it
will have a big impact on all companies -- not just Americans."

   He said even Asian companies, which have been showing the
most interest in  Burma  over the past few years, could be
convinced to pull out or not to invest in  Burma  if the U.S.
sanctions are imposed.

   Suu Kyi, who was released from six years of house arrest in
July 1995, favours sanctions and has urged foreigners not to
invest in  Burma  until the situation improves.

LANGUAGE: ENGLISH

LOAD-DATE: March 2, 1997