Home  
Myanmar: Govt. reveals US$11bn foreign debt; S'pore says US should lift sanctions

Updated On: Feb 03, 2012

Myanmar has revealed it owes US$11 billion in foreign debt. The country is negotiating with creditors to repay the debt, which is higher than previous estimates. Meanwhile, Singapore Foreign Minister K Shanmugam has urged the United States to lift economic sanctions against Myanmar, after meeting US Secretary of State Hillary Clinton in Washington DC.

Back in Myanmar, National League for Democracy leader Aung San Suu Kyi has had to postpone a trip to the city of Mandalay, because her party could not get permission to hold a rally at a stadium.

Myanmar's Foreign Debt

Finance Minister Hla Tun revealed the extent of Myanmar's foreign debt in parliament earlier this week. He said the government has begun discussions on the debt with multilateral institutions and donor nations, including Japan and Italy.

Myanmar’s economy was stunted for many years by mismanagement and by Western sanctions against the country.

Mr Hla Tun said US$8.4 billion of the external debt was run up under the socialist administration of General Ne Win, between 1962 and 1988.

The remaining US$2.61 billion debt was incurred after the military junta took over in 1988, making a total of US$11.023 billion.

He said the pre-1988 debt represented bilateral and multilateral loans that the government was unable to pay, because loans and grants were stopped after the junta violently quashed a 1988 pro-democracy uprising. Available revenue at the time went into development projects.

Myanmar's largest creditor for debts before 1988 is Japan, with loans of US$6.39 billion. The biggest post-1988 creditor is China with US$2.13 billion.

The World Bank, the Asian Development Bank and Germany are also owed several hundred million dollars each.

Analysts say the announcement is a rare disclosure, the first time in years that the authorities have made any such data public. In 2009, Myanmar's national debt was estimated at US$7.37 billion.

An IMF delegation that visited Myanmar in January 2012 said the country could become the next economic frontier in Asia if it could turn its natural resources and young labour force to its advantage.

Report: Finance minister says Myanmar’s external debt is $11 billion, most from decades ago [Washington Post (AP), 2 Feb 2012]

Report: Burma 'begins talks' after revealing $11bn foreign debt [BBC, 2 Feb 2012]

Myanmar Government Spending

Myanmar's parliament will soon vote over whether to approve a four-fold increase in government spending on healthcare in Burma. Currently, only 1.3 percent of government spending, or about $US2 per person each year, currently goes to healthcare.

A budget proposal submitted to parliament this week by planning ministers could also see education spending double, from 4.1 percent of the government budget to 8.3 percent.

But there is also a push for more finance to be allocated to the military, which already accounts for 23.1 percent of spending, or around $US2 billion per year. If approved, that figure will climb to 25.1 percent.

Report: Budget revamp targets health, military [Democratic Voice of Burma, 1 Feb 2012]

Singapore: US Should Lift Sanctions


Meanwhile, Singapore Foreign Minister K Shanmugam has urged the United States to lift economic sanctions against Myanmar to encourage democratic reform there.

He made the comments after meeting US Secretary of State Hillary Clinton in Washington DC.

"We believe it's time to look at the sanctions and reconsider their utility," said Mr Shanmugam, who is also Singapore's Minister for Law.

Mr Shanmugam acknowledged that the US needs a long legal process before it can lift sanctions. But Mr Shanmugam argued: "Myanmar needs to be encouraged in this process, and its people need to be helped. I think economic sanctions aren't helping the people."

He said Myanmar's President Thein Sein, who visited Singapore earlier this week, is committed to continuing reforms.

Mr Shanmugam also welcomed greater US engagement in Asia during his meeting with Mrs Clinton. He said that for decades the US has been key to peace and prosperity in Asia. But he stressed that this role should be more than military presence.

"Economic engagement, we think, is extremely important," he said.

Report: S'pore urges US to lift sanctions on Myanmar [TODAY (AP), 3 Feb 2012]

Impetus for Reform: ASEAN Engagement or Western Sanctions?

According to a commentary published in The Economist, Singapore and Myanmar's other partners in ASEAN are keen to take the credit for an effective policy of engagement.

It has naturally suited Myanmar officials to accept this argument. This week, the Myanmar delegation thanked Singapore for continuing to trade with and invest in Myanmar even when it was shunned by the West. But The Economist argues an equally convincing case can be made that the real impetus behind reform was the desire to see Western sanctions lifted.

That said, the debate is academic. It is a diplomatic win-win, where all parties can claim they were right. The same is true of the whole liberalisation process, which has benefited both the opposition and Myanmar's leaders.

But The Economist notes National League for Democracy leader Aung San Suu Kyi has started to raise difficult questions on the campaign trail, such as changes to the constitution, which enshrines a decisive role for the army.

Analysis: Among friends [The Economist, 4 Feb 2012]

Suu Kyi Postpones Trip

Ms. Suu Kyi has had to postpone a trip to central Myanmar because she could not obtain permission to hold a political gathering at a football stadium.

Ohn Kyaing, a spokesman for her National League for Democracy party, said Ms. Suu Kyi would reschedule the trip to Mandalay which had been slated for this weekend.

According to the Associated Press, the failure to receive Election Commission permission for the rally strikes a sour note in the reconciliation process.

Ms. Suu Kyi is leading a slate of her party’s candidates contesting 48 parliamentary seats in an April 1 by-election.

Report: Myanmar’s Suu Kyi postpones political trip after failure to get stadium venue[Washington Post (AP), 3 Feb 2012]







Related Article