By PNA / Kyodo and U.S. News Agency / Asian
Japan said Thursday that Myanmar’s largest creditor will clear the Southeast Asian country’s overdue debt to it in January and that it will resume yen-denominated concessional loans to Myanmar at the earliest time possible next year.
The Asian Development Bank and the World Bank, Myanmar’s second- and third-largest creditors, expressed their intention the same day to clear the country’s debt arrears to them next January, according to Japanese officials.
The envisioned move by the two international lenders, unveiled at a meeting of officials from Myanmar and its main creditors in Tokyo, will pave the way for the international community to start providing full-fledged development assistance to the long-isolated country.
Following the meeting, which was hosted by Japan on the sidelines of the annual meetings of the World Bank and the International Monetary Fund, the Japanese government began arranging tens of billions of yen in such loans to Myanmar for next year, government sources said.
The yen loans to Myanmar, if resumed as planned, would be Japan’s first such lending to the country in 26 years. Myanmar, rich in natural gas and other resources, has been seen as a promising new investment destination for Japanese firms.
During the meeting, participants agreed on the need to unite behind Myanmar’s reform efforts in order to facilitate the country’s reengagement with the international community, according to Japanese officials.
“Addressing Myanmar’s debt issue in a comprehensive way is important for Myanmar to engage in the international community,” the country’s finance and revenue minister Win Shein told the meeting, expressing his appreciation to Japan and other creditors.
The meeting was called mainly to chart a clear path toward settling the roughly US$ 900 million in overdue debts to the ADB and the World Bank. The settlement has been eagerly awaited by Japan, which has already agreed to resolve Myanmar’s roughly 500 billion yen debt to it but has yet to implement the debt relief.
“It is high time that the international community united in its efforts to underpin reform efforts by Myanmar and reintegrate Myanmar as one of its members,” Japanese Finance Minister Koriki Jojima told the meeting, noting that a series of reforms are under way in the country.
Officials from the World Bank and the ADB told the meeting that they were making necessary preparations to help Myanmar clear its debt arrears in January, Japanese officials said.
Under the envisioned clearance, Myanmar would repay its delinquent loans to the international lenders by borrowing bridge loans from the Japan Bank for International Cooperation. The lenders would then make fresh low-interest loans to the country.
Myanmar owes about US$ 500 million to the ADB and US$ 400 million to the World Bank. Countries that have borrowed from these international lenders must clear their debt arrears before they can ask for new financial aid.
Participants in the meeting also agreed that the two international lenders’ full engagement is essential for Myanmar’s economic reform and that active engagement by the IMF is also indispensible in reforming the country’s macroeconomic management, the Japanese officials said.
Japan announced in April that, of the approximately 500 billion yen owed by Myanmar as a result of its delayed repayment of past loans, Tokyo will forgive about 300 billion yen, becoming the first creditor country to make such a move.
Myanmar is expected to repay the remainder by taking bridge loans from Japanese commercial banks, while Japan is to resume low-interest development loans to help the country implement reforms.
Jojima, Japan’s financial chief, said yen-denominated concessional loans would be extended to finance projects involving electricity, road construction, rural development and port facility development.
During the meeting, Myanmar, which has also borrowed from such countries as Germany, Denmark and France, was invited to a meeting in Paris in January to negotiate a multilateral agreement with the so-called “Paris Club” creditor countries.
Officials from 26 countries and five international organizations attended the meeting. Chinese officials, who were scheduled to attend the event, did not show up, the Japanese officials said.
Since President Thein Sein established a reform-minded government in March last year, Myanmar has begun opening up to the world after years of military rule, making a transition to democratic governance.
The ADB forecasts Myanmar’s economy will grow over 6 percent annually in 2012 and 2013. The prospect has raised hopes that the resumption of international assistance to Myanmar will help the Southeast Asian economy grow further.