Decentralisation and broader political economy

  • Since 2011 Myanmar has begun a limited process of decentralisation, and there are pressures for this to be taken further.
  • This project outlined the current level and form of fiscal and administrative decentralisation in Myanmar, and the priorities and challenges for reform.
  • The objectives of decentralisation need to be more clearly defined, and greater attention given to implementation.

Myanmar began its decentralisation process in 2011, but this has so far been limited and the process has been hampered by the absecence of a clear vision for what decentralisation is intended to achieve. There is also lack of clarity as to which level(s) of government are responsible for providing particular services.

Subnational revenue collection is extremely low. Thus, despite subnational governments carrying out only a small proportion of total government spending, they are highly dependent on transfers from the national government. Citizen awareness of subnational funding arrangements and expenditure responsibilities is also low, and mechanisms for demanding accountability are weak.

Given the weaknesses with the current state of fiscal decentralisation, there is considerable scope for policy and administrative reform that can make fiscal decentralisation operate more effectively. If decentralisation is to make service delivery more efficient and more responsive to citizens’ preferences, it is crucial that citizens are given greater opportunities to demand accountability from subnational officials.

GoM has recently taken the important step of providing budget ceilings to subnational governments before they prepare their budgets – this should help to facilitate more effective planning. However, there are still a number of procedures that reduce the incentives for state/region governments to efficiently plan and budget, such as limited auditing, which should be addressed.

Fiscal decentralisation reform also needs to be designed in accordance with several broader forces in Myanmar. The extent of political decentralisation has so far been limited. However, this is likely to increase and will result in changes in expenditure responsibilities. Fiscal arrangements should be designed accordingly. Similarly, potential changes to the management and distribution of large revenues from Myanmar’s natural resources should be considered. Finally, a desire among ethnic minority groups for greater subnational autonomy has been a key factor behind civil conflict and social strife in Myanmar since independence. An effective decentralisation process, incorporating sufficient attention to fiscal aspects, has the potential to reduce conflict and improve political stability.