Myanmar’s junta has approached foreign banknote companies to help it print more money as it faces a shortfall in tax and export revenues, according to the shadow government formed by supporters of ousted leader Aung San Suu Kyi.
The approach, which was confirmed by a second person with knowledge of the situation, comes amid a sharp economic contraction in the country, a boycott on doing business with the junta by the anti-coup camp and a severe wave of Covid-19 infections.
Tin Tun Naing, the finance minister in the parallel National Unity Government, whose members are in exile or hiding, said that the military-controlled ministry of planning, finance and investment had approached foreign banknote and security printing companies, including Chinese firms, but had been rebuffed.
“The problem of acute cash shortage is not something they can solve,” he told the Financial Times. “They will do what they have always done: impose an easy, immediate and crude situation regardless of the cost to the public.”
German banknote company Giesecke+Devrient stopped deliveries to Myanmar’s state-owned Security Print Works in March because of “ongoing violent clashes between the military and the population” in the wake of the coup. In February, military chief General Min Aung Hlaing toppled the government of Aung San Suu Kyi, Myanmar’s elected leader.
The Munich-based company said it was unaware of Myanmar’s approach to other foreign security printers. A spokesperson for the junta, which described the NUG as a “terrorist organisation” and has sought its members’ arrests, did not respond to a request for comment.
Myanmar’s junta-controlled central bank last month denied that it would print additional money to fund the deficit of the “caretaker government”.
However, a second person with knowledge of the situation confirmed the NUG’s claim that the junta was looking for a partner to print banknotes.
“They want to print because they can’t get material from the German company,” said the person, who asked not to be named for fear of retaliation by the regime.
The flow of foreign funds into the country has slowed since the February 1 coup, after some international organisations scaled back their presence and investors suspended their business. State revenues have also been hit by falling tax and utility bill payments, which people have withheld to express opposition to the military takeover.
Myanmar has experienced shortages of physical banknotes since the coup, as people rushed to withdraw savings, causing banks to impose withdrawal limits. Those looking for alternative assets have sought to buy gold or US dollars.
“The economy is forecast to contract sharply this year, with the World Bank projecting minus 18 per cent GDP growth in 2021,” said Khoon Goh, head of Asia research for ANZ in Singapore.
“With Myanmar’s exports falling, and foreign direct investment, as well as overseas development aid, dropping sharply, this has resulted in a depreciation of the Myanmar kyat by 21.7 per cent year to date,” said Khoon.
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