International lenders have agreed to clear Myanmar’s ballooning foreign debts in a show of support for the rapid transformation of the once pariah state.
The World Bank and Asian Development Bank on Sunday announced a long-awaited deal that would clear Myanmar’s arrears of a combined $960 million using bridge loans from the Japan Bank for International Cooperation, reports the Financial Times.
The deal follows Japan’s unilateral decision to cancel nearly $6.6 billion in bilateral debt as well as a similar move from Norway, which settled all $534 million in arrears owed by Myanmar.
Myanmar was also unburdened of at least 50% or $2.2 billion from a $4.4 billion in bilateral debt after intense negotiations with the Paris Club, an informal grouping of creditor nations including France, Germany and the US, on Monday.
The deals, which cleared $11.3 billion in outstanding foreign debts, come as a major breakthrough for Myanmar after President Thein Sein vowed to make debt clearance a priority amid political and economic reforms.
Still, analysts raised concerns that the debt-relief was handed out too early amid the violence in northern Kachin state.
In recent weeks, the UN, the US and the EU have all urged an end to the fighting, and warned that further conflict could endanger aid plans for Myanmar.