Myanmar News Articles: Burma Still Owes $5 Billion in Foreign Debt

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Piles of Burmese kyat currency are counted in Rangoon. (Photo: Jpaing / The Irrawaddy)

Burma owes over US$5 billion in foreign debt, compared to nearly $11 billion when President Thein Sein took office, according to an economic adviser to the president.

When Thein Sein's quasi-civilian government came to power in 2011, the country owed $11 billion to the World Bank, the Asian Development Bank and Paris Club member countries.

"We still need to return US$4 billion to the Paris Club countries. We also owe Japan, because we borrowed money from it to pay off our debt to the World Bank and the Asian Development Bank. So there will be over US$5 billion in total," Dr. Zaw Oo, an economic adviser on the National Economic and Social Advisory Council, told The Irrawaddy.

He said the interest rate for the Japanese loan was not even 1 percent, and that the remaining $4 billion in debt to the Paris Club countries would likely be reduced.

"I think we will find out about it very soon, maybe next week," said the economic advisor. "Debt reduction can take different forms. Norway just forgave our debt, and that was the best kind. Other Paris Club members may follow Norway's example."

He said two Paris Club countries planned to reduce Burma's debts but added that he could not confirm which countries.

The Paris Club is an informal group of official creditors from 19 countries: England, France, Germany, Japan, Norway, Italy, Finland, the Netherlands, Denmark, Canada, Australia, Spain, Belgium, Austria, Sweden, Switzerland, Ireland, Russia and the United States.

Dr. Zaw Oo added that Burma could not currently take out any more loans from Paris Club countries due to regulations, and would instead plan to borrow from the World Bank.

"Proper discussions about loans from the WB will begin at the end of this month," he said. "The WB has already agreed to lend money to Burma with a cheap interest rate."

Meanwhile, Burmese economist Dr. Aung Ko Ko has recommended that foreign loans be used in programs that will benefit the general public.

"The government needs to think about spending those loans on programs beneficial to its citizens, such as health and education or infrastructure for economic development," he said. "It also needs to calculate how much it will spend on each program, and pros and cons as well. Otherwise money borrowed by the government will become debt for the people."