Amid the Junta coup, Myanmar's crumbling economy runs low on cash

In the terror-hit nation of Myanmar, if you need cash, you have to get up early.

Queues start forming outside banks at 4 am, where the first 15 or 30 customers receive a plastic token that allows them to enter the bank when it opens at 9:30 am and withdraw cash.

Let's take a look:

Coup and cash flow

The cash crisis is one of the most pressing problems for the people of Myanmar after the February 1 military coup. The central bank, now run by a junta appointee, has not returned some of the reserves it holds for private banks, without giving any reason, leaving the banks short of cash.

The banks themselves have been closed or open only intermittently as many staff have gone on strike to protest against the coup. Meanwhile, internet outages make online transactions difficult and international transfers have largely stopped working.

(Photograph:Reuters)

Cash only

This presents problems for Burmese people and small businesses as they try to navigate an economy rapidly crumbling under the country’s new leaders and the collapse of tourism, one of Myanmar’s fastest-growing sectors. The Burmese kyat has dropped some 20 per cent in value since the coup.

“It’s now very difficult to operate a business,” said Hnin Hnin, an entrepreneur in her mid-20s who supplies shampoo and bedsheets to high-end hotels. “Traders don’t accept bank transfers now. They want cash. So we need to find the cash.”

As a result, Hnin Hnin, who agreed to be identified only by a part of her name to discuss sensitive matters, has been one of the thousands of people queuing daily in front of the few functioning cash machines in major cities. Some people band together in groups of five, she said, so one person can take out money for the whole group.

(Photograph:Reuters)

Non-functioning banking system

It is now almost impossible to get hold of US dollars or other overseas currency at regular exchange centres in Yangon. At a commission rate of up to 10 per cent, black-market traders will take online transfers in exchange for physical notes in various currencies. 

The coup and the protests against it now mean there is no functional banking system, according to Richard Horsey, an independent political analyst specialising in Myanmar.

(Photograph:Reuters)

Bank run and poverty

People want to withdraw cash now to buy food and other essentials, and also because they fear the banking system will collapse.

According to experts, the cash crisis is the most immediate sign of much deeper economic problems facing Myanmar. Financial research firm Fitch Solutions said in April it expected Myanmar's gross domestic product to shrink by 20 percent in 2021.

The United Nations Development Programme said last month that Myanmar faces economic collapse due to the combined effect of the new coronavirus and the coup, which in its worst-case analysis could put nearly half the country’s 54 million people into poverty, compared to about a quarter in 2017.

(Photograph:Reuters)

No respite

Millions are expected to go hungry in the coming months, the United Nations’ World Food Programme said in an analysis published in April.

Some workers have trickled back to resume their jobs at banks in the past few weeks, but financial analysts see no immediate alleviation of the cash shortage.

(Photograph:Reuters)

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