The World Bank is helping assess Myanmar’s debt level as it rekindles relations with the country 25 years after stopping loans, an official at the lender said.
The Washington-based World Bank will open an office in Myanmar in June, Pamela Cox, the bank’s vice president for East Asia, told reporters today. The lender and the International Monetary Fund are gathering data about the nation’s debt sustainability, she said.
“This is to see how much debt stress this country is going to be under once it normalizes relations and how much debt should be forgiven,” said Cox, who will travel to the country in June to meet with authorities. “We’re not at the stage of loans yet.”
The European Union and nations including the U.S. and Australia have said they will ease sanctions against Myanmar, where a new government took power in March 2011 and initiated steps to liberalize after five decades of military rule. Japan announced April 22 it would forgive 303.5 billion yen ($3.8 billion) in loans and interest and roll over 198.9 billion yen of debt with a new loan.
Myanmar President Thein Sein is courting investment from Japan amid a shift toward democracy over the past year that’s encouraged re-engagement with developed nations. Honda Motor Co. is among companies expressing interest in Myanmar, a nation of 64 million people formerly known as Burma.
“Right now we actually don’t know clearly what they owe everybody,” Cox said.
The bank is owed $393 million in arrears, according to Cox, who said the World Bank stopped lending directly to Myanmar in 1987 and that the last loan projects ended in the early 1990s. Other arrears include about $500 million to the Asian Development Bank, she said.
The ADB is preparing to offer Myanmar several hundred million dollars per year in grants and loans if the government clears overdue debts and Western nations give approval, Craig Steffensen, who oversees the bank’s activities in the country, said on April 11. The Treasury Department is bound by law to block the ADB and World Bank from providing most assistance to Myanmar as part of sanctions first imposed in 1988.
The ADB is limited to fact-finding missions that cost less than $1.5 million because board approval is needed for anything more, Steffensen said. U.S. Secretary of State Hillary Clinton signed a waiver in February allowing the ADB, World Bank and IMF to conduct “assessment missions and limited technical assistance.”
The World Bank’s immediate focus in Myanmar is analytical work, which Cox called “economic plumbing,” to understand where the bank can help, she said.
That means, for instance, finding out whether the country has strong enough financial and budget systems and a functioning government, she said.
“What we want to focus on are issues also around poverty, around creating jobs, around livelihoods,” to help “quick start higher incomes for local people,” Cox said.