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Monday March 27, 2006

Myanmar's ruling junta increases government salaries, raising inflation concerns

NAYPYIDAW, Myanmar (AP) - Information Minister Brig Gen. Kyaw Hsan said that salaries of government employees have been raised effective April 30, officially confirming what many state employees heard earlier. 

Kyaw Hsan spoke to reporters who arrived in the country's new administrative capital of Naypyidaw to cover Armed Forces Day celebrations on Monday. 

Civil servants will receive increases ranging from five to eleven times their old salaries, depending upon rank.  

The lowest-ranking state official will now get 15,000 kyats (US$13; euro10) a month, while those at the top end of the scale will get 200,000 kyats (US$174; euro135).  

Members of the military are paid on a different scale, but also received raises. 

In a familiar scenario in the mostly state-controlled economy, when news of the raises began circulating on Saturday, consumers fearing inflation sparked a small wave of panic buying, in turn putting upward pressure on prices. 

The raises appeared to be an effort to placate civil servants who in many cases make less than US$10 a month (euro8.30) and were hit hard by fuel price increases last year. 

As word of the pay raise swept through markets in Yangon on Saturday, shoppers said they were concerned that the price of rice and other commodities would shoot up in the coming days, as has been the case when the government raised salaries before. 

Already by Saturday, vendors said that the price of one viss (1.6 kilograms) of groundnut oil increased from 2,300 kyat (US$2; euro1.66) on Friday to 2,500 kyat (US$2.17; euro1.80) on Saturday. 

Uncertainty over economic matters also usually drives down the value of the kyat currency, at least temporarily, as people try to stock up on hard currencies. 

Money traders said the kyat has begun to weaken, going from 1,150 kyat to the dollar on Friday to 1,200 kyat to the dollar Saturday.  

Prices for an ounce of 24 carat gold, traders said, rose from 346,000 kyat (US$301; euro233) on Friday to 375,000 kyat (US$326; euro253) on Saturday. 

Asked if the hike will be announced in the state-controlled media, Kyaw Hsan said, "Well, there is no need to announce it officially. Everybody knows already.'' 

Myanmar has always been one of the poorest countries in the region. 

Conditions have worsened in recent months following a government move to cut fuel subsidies which resulted in a nine-fold increase in the price of gasoline and diesel. Prices for other commodities also increased. 

The United Nations in December warned of the potential for a humanitarian crisis, citing rising rates of poverty and an under-financed health care system that has allowed HIV, malaria and drug-resistant tuberculosis to go unchecked. 


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