Myanmar’s central bank issued a directive on the order of the country’s military junta, obliging corporate and individual borrowers with foreign loans to suspend their repayments, in an effort to defend the country’s dwindling foreign exchange reserves and prevent the local currency, the kyat. Crash. In a letter to banks licensed to trade foreign exchange, Central Bank Deputy Governor Win Thaw instructed borrowers to suspend interest and principal repayments on various foreign loans acquired in cash or in kind, Bloomberg reported.
Myanmar’s central bank issued a directive on the order of the country’s military junta, obliging corporate and individual borrowers with foreign loans to suspend their repayments, in an effort to defend the country’s dwindling foreign exchange reserves and prevent the local currency, the kyat. Crash.
In a letter to banks licensed for foreign exchange transactions, Central Bank Deputy Governor Win Thaw instructed borrowers to suspend interest and principal repayments on various foreign loans obtained in cash or in kind. Bloomberg News.
The directive requires licensed banks to notify their commercial customers with foreign debt to adjust loan repayment schedules with overseas lenders.
At least $1.2 billion in outstanding foreign loans
The debt includes at least $1.2 billion in outstanding dollar-denominated corporate loans, the report said. Borrowers include Ooredoo Myanmar, the domestic arm of Qatari telecommunications company Ooredoo, City Square Commercial (a real estate arm of Shwe Taung Group, a Myanmar conglomerate run by tycoon Aik Htun), and telecom tower companies Apollo Towers Myanmar and Irrawaddy Green Towers, among others.
The repayment ban comes after other steps to tighten foreign exchange rules, as the country’s currency lost a third of its value against the dollar last year after the Feb. 1 coup triggered a freeze on some U.S. foreign exchange reserves and a suspension of multilateral trading. Aid – This is the main source of foreign exchange supply in Myanmar.
Mandatory foreign currency exchange
Another rule is introduced Earlier, foreign exchange earners – businesses and individuals – were asked to convert their earnings into kyat at a reference rate of 1,850 to the US dollar set by the central bank in April, a move aimed at protecting the local currency from volatility . The government has also banned imports of cars and luxury goods, and has tightened imports of fuel and cooking oil to protect its reserves.
The currency exchange rules sparked a lot of criticism, with the government initially granting exemptions to registered companies with at least 10 percent foreign ownership, but that was later revoked.
“Shot in the Foot”
Observers believe that all these measures – considered by some to be destabilizing – are essential to stabilizing a collapsing economy as long as the core issue of Myanmar from an international perspective, namely the murderous junta regime remains at the helm and accompanies it. International sanctions remain in place with minimal effect.
“Foreign loan repayment bans and forced exchange of foreign currency earned in Myanmar further deteriorate Myanmar’s image for foreign employees and investors,” a Myanmar-affiliated reporter told investment rattan on the condition of anonymity.
“No one in the junta realizes that these measures — against skilled workers on foreign paychecks and undermining the country’s international credibility — are a huge blow? Not smart, really.”
