Oct 11, 2012

Japan to provide Myanmar loans to pay off ADB, World Bank debt

Japan will provide loans to Myanmar to help it repay debt to the Asian Development Bank and World Bank starting early next year, Finance Minister Koriki Jojima said.

“Japan welcomes that the World Bank and Asian Development Bank will be in a position to clear” their loans, Jojima said today at a meeting between Myanmar and its creditors in Tokyo as part of the International Monetary Fund and World Bank’s annual meeting. The bridge loans will come from the Japan Bank for International Cooperation, a state-backed lender.

The settlement deal follows an April debt forgiveness plan as Japan, Myanmar’s biggest creditor, re-engages with the Southeast Asian nation that is shifting toward democracy after five decades of military dictatorship. Japan will start implementing the plan in January, paving the way to provide infrastructure loans to the country next year, Jojima said.

The Asian Development Bank and the World Bank signalled their intention to start clearing Myanmar’s debt, according to a Japanese Finance Ministry statement after the conference. JBIC’s bridge loans will cover the lenders’ combined overdue debt of about $900 million, Vice Finance Minister for International Affairs Takehiko Nakao said at a briefing.

The ADB and the World Bank are in talks with the Myanmar government about debt settlement, a move that would bring them closer to resuming lending, ADB President Haruhiko Kuroda said in a group interview this week. Myanmar owes about $500 million to the ADB and $400 million to the World Bank.

Fresh Assistance

“We can’t provide fresh financial assistance to the country and the World Bank has the same problem, and we together are negotiating with the Myanmar government for solutions,” Kuroda said in Tokyo. “I expect we can resolve the issue and the ADB hopes to resume assistance to Myanmar soon.”

Japan in April unveiled the plan to forgive 303.5 billion yen ($3.9 billion) in debt owed by Myanmar as the country’s shift toward democracy encourages developed countries to re- engage with the nation. The plan also includes rolling over an additional 199 billion yen of debt that Myanmar will repay to the Japanese government by using bridge loans provided by Japanese lenders.

Since Thein Sein became president in March 2011, he has freed hundreds of political prisoners, eased media restrictions and started peace talks with ethnic minorities. The moves prompted the US to allow companies to invest in Myanmar for the first time in 15 years and ease a ban on imports.

Easing Sanctions

Opposition leader Aung San Suu Kyi backed the easing of sanctions. The former political prisoner joined parliament for the first time in May after reaching an agreement with Thein Sein in last year.

Myanmar’s economy may grow as much as 8 percent annually if policy makers keep prices under control, increase trade and attract investment, the ADB said in August. About a quarter of the country’s 64 million people have access to electricity, while mobile-phone and Internet usage are among the lowest in Southeast Asia, the ADB said.

Source: gulfnews.com