Myanmar unveils major debt relief deal

YANGON: Myanmar announced a deal with international lenders to cancel nearly US$6bil of its debt, another milestone in the rapid transformation of the former junta-ruled nation.

The country also cleared its arrears to the World Bank and the Asian Development Bank (ADB) with the help of a bridge loan from Japan, removing another key hurdle for the resumption of international aid.

Myanmar said the Paris Club of creditor nations had agreed at a meeting on Jan 25 to write off half of its debts to the group in two phases, with the remaining amounts to be rescheduled over 15 years.

There was no immediate comment from the Paris Club, an informal grouping of industrialised nations formed in 1956.

According to Myanmar, Japan has committed to cancel arrears worth more than US$3bil while Norway is writing off US$534mil. It said other bilateral donors were expected to follow suit.

Myanmar Finance Minister Win Shein said the agreement heralded the beginning of “an era of new relationships in which Myanmar is committed to fully cooperate with all the members of the Paris Club”, according to a government statement.

He said Myanmar would use the resources made available by the debt relief for development and poverty reduction programmes.

Japan had already announced plans to cancel some of Myanmar’s debt, saying last April it would forgive 300 billion yen (US$3.3bil) of the 500 billion yen it was owed.

In another landmark, Myanmar restructured more than US$900mil of debts to the World Bank and the ADB, enabling the two development lenders to resume assistance to the country after a decades-long absence.

The World Bank in November pledged US$245mil of aid to support Myanmar’s economic development.

The Manila-based ADB said yesterday it planned “major investments” in road, energy, irrigation and education projects, hailing its return to Myanmar as a “historic tipping point”. —