YANGON – Tokyo plans to extend around $900 million in bridge loans to Myanmar through a banking consortium to help the country pay back debts in arrears owed to the World Bank and the Asian Development Bank, it was learned Wednesday.
Under World Bank and ADB rules, borrowing countries are required to clear debt arrears before they can ask for new financial assistance.
The United States, the largest shareholder in both the World Bank and ADB, has eased sanctions against Myanmar following reforms in the country, but it still bars the two banks from extending fresh loans.
The Myanmar government hopes Japan’s bridge loans open the way for financial assistance from the World Bank and ADB once Washington removes remaining sanctions imposed against the country, possibly by January.
Both the World Bank and ADB opened offices in Yangon on Wednesday to lay the groundwork for the reopening of loans to the country.
The World Bank announced on the same day it will extend $85 million in grants to Myanmar to help the country combat poverty as the first step toward re-engaging with the once internationally isolated country.
The World Bank holds about $400 million, and the ADB about $500 million, in overdue debts from Myanmar.
Both financial institutions have halted lending to Myanmar since the late 1980s as part of economic sanctions imposed by the international community to protest the human rights abuses by the country’s former military junta.