Strong natural gas exports have swollen Burma's foreign exchange reserves to a record high of $3.6bn but have not been used by the military regime to boost health or education spending for the impoverished population, the International Monetary Fund says in a new report.

In its annual evaluation of Burma's economy, the IMF says the global economic slowdown and the devastating May 2008 cyclone, which killed 140,000 people, have taken their toll on the country. Gross domestic product growth slowed to about 4.5 per cent last year, from 5.5 per cent a year earlier.

The military regime's spending on extravagant showcase projects, such as the new political capital, Naypitaw, is being financed by printing money, fuelling inflation of about 30 per cent. Social spending, meanwhile, remains the lowest in Asia, according to the IMF.