Germany to forgive Myanmar's half million euro debt

February 11, 2014 - 2:40:47 pm

YANGON: Germany and Myanmar finalised an agreement on Tuesday to clear half a billion euro or $682 billion in debt owed by the Southeast Asian nation.

Myanmar negotiated the initial debt forgiveness agreement a year ago with the Paris Club, a group of creditor countries, and German Federal President Joachim Gauck announced that his country could proceed with its part of the deal after meeting Myanmar president Thein Sein in the capital, Naypyitaw, on Monday.

"A sustainable agreement has been reached allowing Germany to forgive half a billion euro of debt," Gauck said in a speech in Yangon, the country's biggest city and commercial capital.

Myanmar's government said it had met the Paris Club on Jan. 25, 2013, and member countries had agreed to cancel half of the arrears Myanmar owed them in two stages, rescheduling the rest over 15 years, with seven years' grace.

On top of that, Norway cancelled all the $534 million owed to it, while Japan cancelled more than $3 billion, adding up to $6 billion, more than 60 percent of the total owing, the government said. 

Japan also last year helped Myanmar clear arrears it owed to the World Bank and Asian Development Bank. 

Allowing the institutions to begin working again in the country after they cut ties with the former military government, which refused to service its international debts.

A quasi-civilian government took over in 2011 after 49 years of unbroken military rule, ushering in sweeping policital and economic reforms which have allowed donors to work with Myanmar.

The European Union, Australia and other countries have lifted sanctions imposed during military rule, while the United States has suspended most of its sanctions, allowing western companies to do business in Myanmar.

Gauck also announced the opening of an office of the Delegation of German Industry and Commerce in Myanmar, which will provide expertise and advice to German companies interested in doing business in the country.

The delegation said in a statement that German companies could contribute to developing infrastructure and energy, as well as forging "bilateral business relations". (Reuters)