Myanmar & COVID-19

Myanmar to Borrow $200 Million From World Bank to Assist Farmers

By Thiha Lwin 27 May 2020

NAYPYITAW—Myanmar’s government plans to obtain US$200 million (280.45 billion kyats) in loans to implement the National Food and Agriculture System Project (NFASP) to rehabilitate rural farmers after the COVID-19 pandemic is over.

Deputy ministers for agriculture and planning explained the government’s plan to obtain loans from the World Bank’s International Development Association to Parliament on Tuesday.

“The project is intended to rehabilitate agribusinesses [hit by COVID-19] and overcome the crisis by targeting low-income families and increasing productivity for food security,” Deputy Minister for Agriculture, Livestock and Irrigation U Hlaw Kyaw told Parliament.

Of the $200 million worth of loans, $135.33 million will be used for agricultural research and development, agricultural inputs and dissemination of agricultural knowledge, and $54.32 million will go towards improving the quality of agricultural produce, boosting competitiveness, establishing norms to compete in international markets, and control of animal diseases.

A total of $10.02 million will be used for project management, and $330,000 will be kept as emergency funds, according to the deputy minister.

Implementation of the project will start on June 30, 2020 and end on Dec. 31, 2025. The loan must be repaid over 30 years, according to the Ministry of Finance, Planning and Industry.

Myanmar will have to pay annual interest of $4 million for first five years, and make principal plus interest payments of around $10.56 million per year for the next 25 years, said Deputy Minister for Finance, Planning and Industry U Maung Maung Win.

“The agriculture and livestock sector has the greatest potential to help speed the economic recovery after COVID-19 is over. It is our view that not only state funds, but also foreign loans should be used to revive the sector,” U Maung Maung Win told the parliament.

The loan is considered concessional, as its interest rate is 1.25 percent year and the service fee is 0.75 percent per year, he said. A concessional loan is one whose terms are more generous than those available under normal market conditions.

The NFASP will be implemented in 228 townships in four agro-ecological zones—dry; delta; hills; and mountains and coastal.

Famers have sustained losses for the past few years, with many being forced to borrow money from lenders as well as sell some of their land and draught animals, said farmer U Aung Lin of Pelkya Village in Magwe’s Kamma Township. The use of animals, rather than machinery or vehicles, is still common on farms in many rural areas of Myanmar.

“The paddy harvest was low due to climate change last year. We are struggling to make ends meet. No farmer is doing well. It would be good [if the government] provides loans so that we can switch to livestock breeding,” said U Aung Lin.

Myanmar’s agricultural sector still relies on traditional farming methods, and lacks access to modern equipment and technologies, said Lower House lawmaker U Sai Tun Aye of the Shan Nationalities League for Democracy, adding that the government has been unable find markets for exports of agricultural produce.

“I doubt the loans will immediately benefit farmers. The actions taken by successive governments have delivered hardly any practical results,” U Sai Tun Aye said.

As of Dec. 31, 2019, the Agriculture Ministry had signed agreements on a total of $2.46 billion worth of loans. So far, it has received $1.131 billion of that money. The ministry currently has $903.214 million worth of outstanding loans to repay, according to U Maung Maung Win.

Translated from Burmese by Thet Ko Ko

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