Thu 11 Oct 2012
Filed under: Business / Trade,International,News
Tokyo – A meeting of Myanmar’s key international creditors agreed Thursday on the importance of supporting the country’s overhauls, though they didn’t reach a comprehensive deal to reduce the emerging Southeast Asian nation’s debt burden, Japan’s finance ministry said.
In a wide-ranging conversation, World Bank President Jim Yong Kim discusses the Europe crisis, the risks to developing countries, his aim to end poverty, and China’s transition from borrower to leader with Tokyo bureau chief Jacob M. Schlesinger.
“Participants shared the view that the international community should unite to back such reform efforts by Myanmar, so as to facilitate Myanmar’s early re-engagement with the international community,” said a statement issued by the ministry after a meeting of the creditors.
Representatives from 26 countries, the World Bank, the Asian Development Bank and others took part in the meeting, which partly represents Japan’s efforts to bring the once-pariah state into the global economic fold and to resolve debt problems that have long impeded its economic growth.
Despite the absence of a comprehensive pact, the debt negotiations appear to be making quick progress as Japan, acting as a de facto liaison between the emerging Southeast Asian nation and the rest of the developed world, steps up efforts to bring Myanmar into contact with the international community.
Myanmar’s overdue payments to the rest of the world total roughly $7.7 billion by the Japanese finance ministry’s estimates. About 95% of the arrears are with Japan, the World Bank and the Asian Development Bank, Japanese officials said. The trio is now looking to clear all its Myanmar arrears by as early as January through bridge loans and write-offs, the officials added.
The overdue payments have blocked some inflows of much-needed capital into Myanmar because countries or banks usually don’t make additional loans to parties who fail to pay back debt in time. Removal of the arrears is thus a crucial step that would give Japan and the international and regional lenders valid reasons for resuming funding support for Myanmar. Japan on Thursday went ahead and pledged to extend new yen loans to Myanmar “at the earliest possible timing” next year.
Japan’s fellow members of the Paris Club—a group of sovereign creditors—stopped short of pledging debt forgiveness for Myanmar the same day, as expected, effectively blocking a broad agreement. But in an indication of their friendly mood toward Myanmar, the club will invite the country to its planned gathering in Paris in January to “negotiate a multilateral agreement” to be “implemented once multilateral arrears are cleared,” according to the statement.
“Participants recognized the importance for Myanmar to work closely with Paris Club creditor countries toward an expeditious clearance of arrears, an indispensable step before resuming full-fledged assistance to Myanmar,” the statement said.
Participants also agreed that on behalf of Myanmar’s creditors, many of whom remain skeptical of its commitment to reform efforts, the International Monetary Fund should play a role in monitoring Myanmar’s policy stance to ensure the continuance of its overhaul, the statement said.
Meanwhile, signs of tension between China and Japan were again apparent during the Myanmar meeting, with Beijing canceling its planned participation in the meeting, according to Japanese finance ministry officials. The cancelation was “disappointing,” Japanese Vice Finance Minister for International Affairs Takehiko Nakao said at a news briefing.
Write to Takashi Nakamichi at email@example.com