Burma: Billion dollar con
Ever got a bum deal when changing money in a foreign country? Here’s an exchange rate scam to beat them all.
Bearing in mind the furious global thirst for fuel, Burma’s stores of natural gas have become the mainstay of its economy. But there’s been some pretty nifty accounting going on with the monies earned, as an article by Sean Turnell of Burma Economic Watch published in The Irrawaddy demonstrates.
With gas prices airborne, Burma should have made huge gains by now. But not so. The gas export earnings are being published in government accounts at the ‘official’ exchange rate of the Burmese currency, the kyat. So every export dollar earned is being entered at the official rate of six kyat, whereas the market rate of the dollar runs at around 1,000 kyat.
Turnell has done the math: ‘Recorded at the official rate, Burma’s gas earnings for 2006/07 of $1.25 billion translate into 7.5 billion kyat, or a mere 0.6 per cent of budget receipts. By contrast, if the same US dollar earnings are recorded at the market exchange rate, their contribution of 1,500 billion kyat would more than double total state receipts, and more or less eliminate Burma’s fiscal deficit.’
So where’s all the missing dough gone? According to Turnell: ‘The most likely explanation is that, so recorded, Burma’s foreign exchange earnings can be kept “quarantined” from the public accounts, and thereby are available for the portioning out by the regime to itself and its cronies.
‘Where the funds are located is also a mystery. The only thing we can be certain of is that they are safely locked away from the people of Burma, to whom they rightly belong, and to whom they might just make a difference.’
Well, I’ve heard of skimming the cream off the top, but this amounts to taking the milk too and leaving the empty glass behind.