Austria, Finland, France, Germany, the Netherlands and Poland have deferred repayments totalling $98 million including interest for the May to December 2020 period. The debt amount comprises 20 percent of Myanmar’s scheduled debt repayments, which stands at approximately $500 million, during this period.

On Wednesday (July 1), ambassadors of the six governments and the EU ambassador Kristian Schmidt, conveyed their decision in a letter addressed to Minister of Planning, Finance and Industry U Soe Win. The Myanmar Times has seen the letter.

“The Europe Union calls on all of Myanmar’s other sovereign creditors to show similar support,” it read. The biggest creditor of the country is China followed by Japan.

Myanmar’s current national debt amounts to about $10 billion, of which $4 billion is owed to China, the Auditor General said in a June presser held in Nay Pyi Taw.

The debt relief allows Myanmar to redirect public funds to urgent priorities such as supporting the public health system, vulnerable communities and struggling local businesses, said EU Ambassador Kristian Schmidt.

The bloc’s top diplomat in Myanmar told this newspaper that Beijing and other creditors should follow suit.

“It makes no sense for the EU to grant this debt deferral if it is in order to pay debt payments to other creditors that have also signed up to the G20 initiative.

“There’s a lot of talk of Pauk-phaw partnership [brotherhood-like Sino-Myanmar relationship often used by China], and here is a clear case of showing that in a moment of crisis, these payments should be immediately deferred,” the envoy said.

The majority of Myanmar’s debt was incurred under the military regime, which Ambassador Schmidt said was “toxic” and for “non-productive purposes”. 

The move is the first debt suspension for the Southeast Asia country from a member of the G20 since the Paris Club’ Debt Service Suspension Initiative was agreed in April. 

The EU has been mobilising funds and rolling out programmes for sectors and groups in Myanmar which are most affected by the COVID-19 crisis. A €5 million Myan Ku emergency fund was set up for garment workers in May and has disbursed over K2 billion to 21,690 workers as of this week.

In addition, the bloc has mobilised up to €30 million for the garment industry, frontline health workers, migrant workers, and those living in IDP camps and conflict-affected areas, among other programmes.

Source: https://www.mmtimes.com/news/europe-defer-myanmars-debt-payment-urges-china-follow-suit.html