Myanmar gets total debt relief of $6 bn, aid flows set to rise
Myanmar has cleared its arrears to the World Bank and Asian Development Bank and secured a huge debt write-off by creditor countries grouped in the Paris Club, clearing the way for aid donors to step up work to support the government's reforms.
Since taking office at the head of a quasi-civilian government in 2011, Myanmar President Thein Sein has freed political prisoners, unmuzzled the media and begun to reform the economy with a new foreign investment law and an exchange rate determined more by market forces.
In response, Western countries have eased sanctions imposed on the previous military regime.
International financial institutions have offered technical help but have been prevented from doing more by debt arrears accumulated under the military, which, under their rules, stopped them offering new loans.
However, on Monday, the Asian Development Bank (ADB) said the arrears owed to it had been cleared with the help of Japan, so it could resume operations in Myanmar. It offered a $512 million loan for social and economic projects.
The World Bank said Myanmar had also paid the money owed to it, again with the help of Japan, and it had responded with a $440 million credit.
The government said in a statement it had met creditors grouped in the Paris Club on Jan. 25 and they had agreed to cancel half of the arrears Myanmar owed them in two stages, rescheduling the rest over 15 years, with seven years' grace.
On top of that, Norway had cancelled all the $534 million owed to it, while Japan was cancelling more than $3 billion, it said.
"These agreements result in total debt relief of around $6 billion, that is, more than 60 percent of total debt," the government said.
Finance Minister Win Shein said in the statement this marked "an era of new relationships in which Myanmar is committed to fully cooperate with all members of the Paris Club". He promised that resources freed up by the debt relief would be used for development projects and poverty reduction.