In a letter sent to the Union Minister of Planning, Finance and Industry U Soe Win yesterday (1 July), EU member states Austria, Finland, France, Germany, the Netherlands and Poland announced the deferral of interest and capital payments representing USD 98 Million [134.5 billion MMK] or approximately 20% of Myanmar’s overall scheduled debt service for that period.
“Today’s announcement from Team Europe is part of our coordinated global response to the COVID-19 crisis,” said EU Ambassador Kristian Schmidt, who signed the letter together with the ambassadors from the six EU Member States.
EU member states have granted Myanmar debt relief in the past. Austria, Finland, France, Germany, the Netherlands and Poland are currently the only EU countries to which payment are due this year. This EU announcement is the first confirmed debt suspension for Myanmar under the G20 and Paris Club’ Debt Service Suspension Initiative agreed in April. The EU said it fully supports the debt servicing suspension and has called on all of Myanmar’s other sovereign creditors to do the same.
“With this initiative, Europe puts debt repayment on hold. Myanmar can now direct public funds to the health sector, to the most vulnerable communities and to help struggling businesses to achieve sustainable economic recovery,” Ambassador Schmidt added.
The G20 debt service suspension covers all International Development Assistance (IDA) countries and least developed countries as defined by the United Nations.
Since April, the EU has been mobilising funds and adapting programmes for sectors in Myanmar that are most affected by COVID-19 crisis. This includes the €5 million (MMK 7.9 billion) Myan Ku emergency fund for garment workers; the €14.6 million (MMK 23 billion) co-financed LIFT fund for migrant workers and vulnerable groups including pregnant women and elderly people; over € 5 million (MMK 8 billion) in combined humanitarian assistance for IDP camps in Rakhine State and other conflict-affected areas; and accelerated payments from the EU’s € 221 million (MMK 382 billion) package for the education sector.