RANGOON—The World Bank is stepping up support for reforms in Burma by helping clear almost US $400 million debt and providing an additional $85 million in grants for social work.
The institution has not made any loans to Burma since 1987 but returned to the country on Wednesday with the opening of a new Rangoon office after the former pariah state began a tentative program of political and economic reform.
The proposed $85 million loan is hoped to be approved by October and aims to benefit the population through grass roots development programs which will allow communities to decide whether to invest in schools, roads, water or other projects.
“Myanmar is among the poorest countries in the region. The needs of the people are great—and the World Bank Group is working with partners to support government reforms that will improve people’s lives, especially the poor and vulnerable,” said Pamela Cox, the bank’s vice-president for East Asia and the Pacific. “This will help lay the foundation for broad economic growth, creating opportunities for all.
Burma will have access to interest-free loans from the International Development Association, the World Bank’s fund for the poorest countries, after it clears arrears of $397 million. But this does not represent the end of Burma’s debt mountain with nearly $500 million still owed to the Asian Development Bank (ADB), which also recently opened a small Rangoon office.
“I do want to emphasize we’re not forgiving the debt to Myanmar. We’re just clearing the back interest payments and Myanmar will resume paying its debts to the World Bank and the ADB,” explained Cox.
“We look for working with the country both in the public sector and private sector to encourage growth and rapid movement. The World Bank supports financing to government and IFC [International Finance Cooperation] provides financing to the private sector. In addition, we will bring technical assistance and global experience across the globe,” she added.
The World Bank has already been carrying out research in Burma and Cox met President Thein Sein, cabinet members and opposition leader Aung San Suu Kyi during her visit. The ADB has also played a leading role in advising Burma’s new quasi-civilian administration about economic reform.
“As we have witnessed in other economies in transition, the private sector plays a critical role in job creation and in providing the means for all to benefit from economic growth,” said World Bank International Finance Corporation Vice-President for Asia Pacific Karin Finkelston.