The Central Bank of Myanmar will slash interest rates by an additional 1 percent after lowering them by 0.5 percent earlier this month. The move will bring the reference interest rate down to 8.5 percent in an attempt to stimulate an economy affected by the global COVID-19 pandemic. The move lowers the bank deposit rate and lending rate by 1 percent as well, to 6.5 percent and 11.5 percent, respectively.

The reduction in rates seems to have been prompted partly by troubles in the garment industry, Myanmar’s main manufacturing sector. Twenty garment factories have closed since the start of the coronavirus outbreak, which the World Health Organization has declared a global pandemic. The closures could leave more than 10,000 people without jobs. Prior to the crisis, the garment industry had been growing with new factories and foreign and domestic investment. Only last month, the Yangon Region Investment Committee announced that ten local and foreign companies were planning garment enterprises in the Thilawa Special Economic Zone totaling USD 24 million.

The garment sector is not the only industry affected by the pandemic, and the government has announced a string of other protections for companies in manufacturing, hotels, tourism and exports, as well as all small and medium enterprises. These include the suspension of a 2 percent advance income tax on exported goods and the establishment of a MMK 100 billion “COVID-19 Fund” to provide one-year loans at 1 percent interest to eligible businesses (see related article).