World Bank, IMF To Enter Burma: US

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By Joseph Allchin

The US will “agree to and support” assessment missions to Burma by the World Bank and IMF as one of a number of rewards for recent reforms offered by US Secretary of State Hillary Clinton during her meeting with President Thein Sein yesterday.

The international lenders could now “begin studying the needs here”, she reportedly told the Burmese leader in Naypyidaw. US sanctions on Burma currently prohibit Washington’s support for lending and technical assistance to Burma by the likes of the World Bank and IMF.

The World Bank ceased its operations in the country in July 1987, and since 1998 Burma was considered unable to pay back its debts to the Bank. The IMF however still carried out annual trips to the country but has not provided any assistance.

The Asian Development Bank (ADB) would most likely also be included among financial institutions able to re-enter Burma. ADB has not provided new finance since 1986 and Burma stopped “servicing” ADB loans in January 1998.

Following the meeting yesterday, a US official said of the IMF: “They’ve had some people here, but the United States has not in the past supported a full, comprehensive assessment of needs, and we are now prepared to do that.”

The most common use for loans from such institutions is for large scale infrastructure projects, of which many analysts suggest Burma badly needs. The country’s debt burden is growing, and according to the US State Department it currently stands in the region of $US9 billion, with around $US4.7 billion owed to Japan alone.

Infrastructure projects have been put on hold, according to the Economist Intelligence Unit, because of budget shortfalls. Burmese economist Khin Maung Nyo believes this to include projects like the trans-Asia highway.

The World Bank has historically been the world’s largest financier for big dams, currently funding an average of four per year globally. Somewhat ironically, this has included dams in China, which has been the biggest player in the Burmese hydropower sector. According to the Guardian newspaper, the World Bank’s portfolio of dams stands at around $US11 billion, with a 50 percent increase in financing since 1997.

The ADB meanwhile is financing dam construction on the Mekong in neighbouring Laos and other regional rivers. The ADB announced last month that they were providing $US465 million for a at 440 MW dam on the Nam Ngum River in northern Laos, one that would be slightly smaller than the proposed Myitsone Dam in northern Burma. Like Myitsone, the majority of the dam’s energy would be destined for a neighbouring country, in this case Thailand.

The Financial Times asserted that the exploratory missions in Burma by the two financial institutions would be “one of the first steps towards lending programmes” and that “analysts say the Obama administration has some room to increase engagement and technical assistance before it must seek the permission of Congress”.

Clinton also said the US would loosen restrictions to UN Development Program (UNDP) funding in the country, “particularly in the area of health and microfinance”.

Burma is in dire need of both, with the current government making no commitments to increase its health spending beyond the 0.9 percent of its annual budget, which equates to about $US1 per person, per year. In comparison, neighbouring China spends roughly $US66 per person each year.

Clinton also said that the US would resume counter-narcotics programmes in Burma, with a US official noting in September that the country’s narcotics industry would grow in importance.

US anti-drug efforts in the country that historically have been carried through with the help of the CIA continued until 2004 when Prime Minister Khin Nyunt was purged, according to former Burmese intelligence officer, Aung Lynn Htut.

In the past they have included the supply of equipment such as Antelope helicopters to the Burmese military, but such measures made little difference to Burma’s narcotics’ output.

Democratic Voice of Burma

The Democratic Voice of Burma (DVB) is a non-profit Burmese media organization committed to responsible journalism.

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