YANGON: Myanmar yesterday hailed a deal with international lenders to cancel nearly $6bn of its debt, another milestone in the rapid transformation of the former junta-ruled nation.
The former pariah state also cleared its arrears to the World Bank and the Asian Development Bank (ADB) with the help of bridge loans from Japan, removing another key hurdle for the resumption of international aid.
The Paris Club of creditor nations said it had agreed at a meeting on Friday to write off half of Myanmar’s debts to the group, with the remainder to be rescheduled over 15 years.
The club, an informal grouping of industrialised nations, praised Myanmar’s “strong commitment” to economic reforms in a statement posted on its website yesterday confirming the deal.
According to Myanmar, Japan has committed to cancel arrears worth more than $3bn while Norway is writing off $534m. 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”.
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 300bn yen ($3.3bn) of the 500bn yen it was owed.
The moves follow a string of dramatic political reforms in Myanmar, which is seeking development assistance and foreign investment to bolster its ailing economy as it emerges from decades of military rule.
In another landmark, Myanmar restructured more than $900m 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 pledged new funds for Myanmar of $440m while the ADB offered $512m. The new credit lines will enable Myanmar to repay the bridge loans provided by the Japan Bank for International Cooperation.
“Myanmar has come a long way in its economic transformation, undertaking unprecedented reforms to improve people’s lives, especially the poor and vulnerable,” said the World Bank’s Myanmar director Annette Dixon.
“Much work remains to be done. We are committed to helping the government accelerate poverty reduction and build shared prosperity,” she added.