Japan to lend $414 million to Myanmar for huge infrastructure project and corporate financing

A deal has been agreed between the governments of Japan and Myanmar to sign off on ¥42.78 billion (US$414 million) worth of low-interest loans.

Over half of the money will be directed towards a huge infrastructure project to build a bridge on an important road crossing Myanmar, Thailand, Laos, and Vietnam. The new bridge should greatly improve logistical efficiency between the countries, and with Thailand being Myanmar’s largest trading partner, it is hoped that economic relations will prosper even further.

In addition to the loans earmarked for the bridge, millions of dollars will also be made available for small and medium sized companies to help stabilise and expand their business operations. This will be much needed finance in the South-East Asian country which has suffered from the economic fallout of Covid-19.

The low-interest loans are expected to provide much needed cash for businesses, thus enabling them to retain workers and perhaps even create more jobs in the ailing economy.

Whilst the loans from the Japanese government are much needed, it must be remembered that as loans, it’s not just free money. Although the interest rates are likely to be low, debt is debt, and with a fiscal deficit of 3.5% of GDP in 2019, the figure for 2020 is likely to be significantly more.