Govt mulls rejection of US$300 million loan from China
THANKS but no thanks, the Myanmar government may be preparing to say to a major Chinese lender. As Foreign Minister Daw Aung San Suu Kyi discussed the future of the controversial Myitsone dam project and other aspects of Myanmar-Chinese relations in Beijing, questions were being raised as to whether the country needs to take on an additional US$300 million in Chinese debt.
In February last year, the former government agreed to accept a $700 million loan from China’s Exim Bank to fund loans to farmers, despite fierce criticism from prominent community figures and social media users who questioned whether the interest rates were too high.
The then-government ultimately persuaded the Pyidaungsu Hluttaw to accept $400 million of the loan, though parliament had turned it down in the previous session due to concerns over high interest rates and difficult repayment schedules.
Now doubts have arisen about the wisdom of accepting the remaining $300 million.
U Myo Aung, director of the Coop Department under the Ministry of Agriculture, Livestock and Irrigation, said, “There is no plan to accept the remaining $300 million portion of the loan.”
Speaking at a press conference on August 19, he said the government would face no penalty for not taking up its option for the outstanding $300 million.
Exim charges 4.5 percent interest a year and the Co-op Department lends to farmers at 18pc a year, or 1.5pc a month, he said. One of the grounds of criticism last year was the high interest rates charged to farmers.
Under current Union Minister U Aung Thu, the department believes its loan programs are popular with farmers. During the government’s 100-day plan, it handed out loans for small investments in agriculture and livestock in sums of K100,000 to K500,000, totalling some K18.2 billion, for items such as seeds, insecticide and fertilisers.
Another K3.474 billion has also been lent to 489 farmers to buy agricultural equipment on the hire purchase system, as well as lending from K100,000 to K150,000 per acre for monsoon paddy.
U Tun Wai, an official of the Pyi Kyaw co-op association of Pyinmana, said, “The Co-op Department lends to individual farmers sums starting from K100,000 for first-time borrowers. On subsequent applications, farmers can borrow up to K500,000.”
Farmer Ko Myo Lin of Pyinmana township said farmers’ financial needs were less pressing than before. “Loans for monsoon paddy come from Myanmar Agricultural Bank. The loan amount has increased to K50,000, which charges only 0.7pc interest a month, and lends no matter how large the acreage of the farm,” he said.
– Translation by Khine Thazin Han