The committee said the Ministries of Home Affairs; Agriculture, Livestock and Irrigation; Transport and Communication; Electricity and Energy and; Industry took the largest loans.

According to the report, loans rose by more than US$1 billion (K1.587 trillion), or 11.5pc, between fiscal 2016-17 and 2017-18.

Of the total loan amount as of March 2018, loans from China formed the biggest amount totaling US$4 billion. Some US$1.11 billion has been repaid.

The Export-Import Bank of China(Exim China) was the creditor for the majority of the loans taken out by the Ministries of Electricity and Energy; Defence; Industry and; Agriculture, Livestock and Irrigation.

Examples of loans from Exim China include the Ministry of Electricity and Energy’s Thout Yay Khat 2 project with Shwe Swan-in Co Ltd where the firm still owes US$5.2 million in capital and a further US$2.7 million to the ministry.

A long-planned caustic soda plan project for which Myanmar Economic Holdings Ltd (MEHL) had signed a 690-million-yuan loan with Exim China in June 2010 remains unbuilt despite 276 million yuan having been spent and MEHL having transferred the No 3 Heavy Industries Enterprise to implement the project. To-date, the government has repaid 289 million yuan in capital and interest and only expressions of interest have been invited for the project.

Meanwhile, Myanmar still owes Japan US$2.5 billion, which was drawn down from a credit line of US$6 billion. Other creditors include multilateral organisations such as Asian Development Bank, International Monetary Fund, India, Thailand and the UK.

The report singled out loans to the Ministries of Electricity and Energy as well as Industry as having interest rates that were higher than other loans at between 2.5pc and 4.5pc.It cautioned that these loans with higher interest rates create a heavier burden on the country’s ability to pay and that decisions to take up such loans should be considered carefully.

The report pointed out that higher interest rates, a weak kyat and rising management costs had taken a toll on government finances, particularly when regular payments on the loans were still being made for businesses that have failed.

It said examples of these failed projects under the Ministry of Industry include the No 14 Mega Factory, with a debt of 6 million yuan, No36 Mega Glasses Branch Factory in Pathein with over 16 million yuan debt, 7 million yuan for replacement of engines and mechanical parts for replacement of the factories in Paleik, ShweTaung, and Sagaing as well as 1 million yuan for the replacement of 324 machines, including eight yarn-spinning machines and 162 weaving machines in Paleik, respectively.

The report recommended strengthening corporate governance after disbursal of loans from the Ministry of Agriculture, Livestock and Irrigation led to financial losses and corruption. For example, an official from Yamethin township, Mandalay Region swindled K2.6 billion from a US$400 million loan taken from Exim China with 4.5pc interest rate for rural development, poverty reduction and microfinancing. – Translated

Source: https://www.mmtimes.com/news/myanmar-foreign-loans-rise-us102b-last-fiscal-year.html