01/28/2013, 00.00
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World Bank announces debt reduction, new loans to restart Myanmar's economy

The bank inks a new deal to provide fresh loans to the former Burma. As the Japan Bank for International Cooperation pledges a bridge loan, Japan lines up to take advantage of the country's potential. The Asian Development Bank does the same. Aung San Suu Kyi insists both China and the United States remain Myanmar's friends, also notes that corruption and freedom of thought are challenges to its development.

Yangon (AsiaNews/Agencies) - The World Bank on Sunday announced a long-awaited deal to allow Myanmar to clear part of the huge decades-old foreign debt accumulated by the country's former military juntas. This will open the door for much-needed loans to jumpstart its lagging but potentially strong economy, experts noted. In view of its need for development, the country must remain friends with the United States and long-standing Chinese ally, said pro-democracy opposition leader Aung San Suu Kyi.

The Japan Bank for International Cooperation, the country's overseas development bank, will provide a bridge loan to Myanmar to allow it to cover outstanding debt to the World Bank and the Asian Development Bank, which totals about US$ 900 million. Myanmar had stopped payments on its old loans in 1987, making it ineligible for new development lending.

The loans' knock-on effect would be to bring in more foreign direct investment, already attracted by the country's relatively low-cost economy.

The debt deal also clears the way for Japan to push ahead with plans for a US$ 12.3 billion plan to build a special economic zone near the capital, which is currently being developed by a consortium that includes Japanese trading firms Mitsubishi, Marubeni and Sumitomo.

For its part, the Asian Development Bank announced it would extend a US$ 512 million loan to Myanmar under the same sort of arrangement with the Japan Bank for International Cooperation.

Japan was Myanmar's largest creditor before 1988 with US$ 6.39 billion in loans. After that, mainland China became the main creditor with US$ 2.13 billion.

Speaking on the sidelines of the Rotary Global Peace Forum in Honolulu yesterday, Aung San Suu Kyi said that US President Obama's policy shift towards Asia is not a threat to Myanmar's long-standing relationship with China.

Speaking about growing US-Myanmar ties, the Nobel Peace Prize laureate said, "I don't think it needs to be an exclusive relationship. It doesn't mean we have to be friends either with the US or China. We need to be friends of both.

For Ms Suu Kyi, who is also National League for Democracy leader, corruption and freedom of thought and speech remain challenges that Myanmar must meet in order to pursue its development in the future.

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