Myanmar Clears Overdue Debt With World Bank, ADB
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Myanmar on Monday will clear up to $952 million of decades-old debts owed to the World Bank and the Asian Development Bank with the aid of a bridge loan from Japan, reported the Wall Street Journal, moving the once-isolated state closer to full inclusion in the global economic community and opening the path towards new development lending.
Myanmar on Monday will clear up to $952 million of decades-old debts owed to the World Bank and the Asian Development Bank with the aid of a bridge loan from Japan, reported the Wall Street Journal, moving the once-isolated state closer to full inclusion in the global economic community and opening the path towards new development lending.
The news came after the Japan Bank for International Cooperation, which is wholly owned by the Japanese government, reached an agreement to provide Myanmar with the short-term funds needed to begin clearing its arrears; while the World Bank and the ADB simultaneously agreed to provide fresh loans to the Southeast Asian state, as part of larger economic reforms.
Stephen Groff, the ADB’s vice president for operations in Southeast Asia, expressed hope that the new loans would help Myanmar lay the foundation for sustainable growth, “which will ultimately lead to major investments in road, energy, irrigation and education projects, as well as investments in other sectors.”
[quote]“This is a historic tipping point for Myanmar,” said Groff in a statement cited by Bloomberg. “To be sure the country is best positioned to benefit from the resumption of donor aid, we are focusing first on the building blocks for stability and sustainability.”[/quote]Since 1987, Myanmar has been locked out of international financial markets after the ruling military junta stopped payments on its old loans, making it ineligible for new development lending. But following the election of Thein Sein as the country’s president in 2011, coupled with a series of political and social reforms, Myanmar has once again begun attracting international funding, while various sanctions against the nation have also been lifted.
[quote]“Myanmar has come a long way in its economic transformation, undertaking unprecedented reforms to improve people’s lives, especially the poor and vulnerable,” said Annette Dixon, country director for Myanmar at the World Bank to the BBC.[/quote]“Much work remains to be done. We are committed to helping the government accelerate poverty reduction and build shared prosperity.”
“The Bank’s engagement, together with the ADB, the Government of Japan and other partners, will help attract investment, spur growth and create jobs,” Dixon added.
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According to WSJ, the deal also represents the successful conclusion of negotiations between the Japanese government and the ADB and the World Bank, with the Japanese hoping to be at the forefront of Myanmar’s rapid transformation from a pariah state to one of Southeast Asia’s most promising economic opportunities.
Besides the loan from the Japan Bank for International Cooperation, the Japanese government last year also agreed to forgive nearly $3 billion in debt owed by Myanmar. Japan, with past loans of $6.39 billion, though still remains Myanmar’s largest creditor pre-1988, while China is the biggest post-1988 creditor at $2.13 billion.
