YANGON (Reuters) - Faced with a shortage of small banknotes, people in Myanmar are resorting to bartering cigarettes, shampoo and other items.
The bartering illustrates the effects of sanctions on one of the world’s most isolated, repressive countries, along with surging inflation and the military junta’s curious decision to stop printing small notes, experts say.
“How shall I give it to you? You want coffee-mix, cigarettes, tissues, sweets or what?”
That question is heard often in shops and restaurants in the former Burma, where coins and small notes disappeared years ago and other notes have now started to follow suit.
State banks were main source of small notes for shop-owners, but they stopped issuing new currency several years ago. Today, beggars who collect money on the street now provide shops with the bulk of their small notes, often in return for food.
Rampant inflation also plays a role. Consumer prices rose by an average 24 percent a year between 2005 and 2008, according to the Asian Development Bank. That has taken a toll on Myanmar’s currency, the kyat.
Officially, the kyat is pegged at 5.5 per dollar. But it fetches nowhere near that, trading instead at about 1,000 per dollar. The cost of printing small notes is now far more expensive than the face value of the notes themselves.
A Yangon government high school teacher said most of her pupils had never even seen coins or small notes.
In the commercial capital, Yangon, 100 kyat (around 10 U.S. cents) is worth a sachet of coffee-mix or a small container of shampoo. Tissue packets or a cigarette or sweets are the equivalent of 50 kyat.
“The shopkeeper gave me three sweets for change of 150 kyat when I bought a bottle of cough mixture last week,” said Ba Aye, a Yangon taxi driver.
“When I told her that sweets would make my cough worse, she offered me a Thai-made gas lighter. When I said ‘I don’t smoke’, she then asked me to accept three packets of tissues that would be useful for my runny nose.”
General-store owner Daw Khin Aye said most of her customers preferred small items like sweets to notes.
“The small notes that are in circulation are in very bad shape — worn out, torn, stained, dirty and in most cases stuck with tape,” she said.
In Sittwe, the capital of western Rakhine State, teashop owners manufacture their own coupons to use as currency.
“It’s far more convenient to use these self-circulated notes instead of small items,” teashop owner Ko Aung Khine said.
“But you need to make sure coupons can’t be forged. Mostly we use a computer to print it with the name of the shop, face value and signature of the shop owner,” he added.
Officially there are 13 denominations of notes in circulation — starting from 50 pya (one cent) up to 5,000 kyat. But only the three big notes (200, 500 and 1,000 kyat) are common. The rest are growing scarcer by the month.
“So far as I know, they print only 1,000 kyat notes now,” said a retired economist from Yangon University. “The cost of printing is far higher than the face value of most small notes... so they now print just the biggest ones.”
How much money is in circulation is anyone’s guess. Myanmar has not publicly released money supply data since 1996-97, when it put the value at 179.82 billion kyat.
Asked by Reuters for the latest figure, a senior government official replied: “We cannot tell you. It’s a state secret.”
Editing by Jason Szep and Alex Richardson