Analysts say high-interest bank loans from WB and ADB pose risk to enterprises

Businesses in Myanmar are borrowing money from World Bank (WB) and Asian Development Bank (ADB) at an interest rate of six per cent, which will pose a risk to them if the currency exchange rate changes, said analysts at the Myanmar Institute of Certified Public Accountants (MICPA).
The analysts gave a talk at office of the auditor general in Yangon on the topic of Foreign Exchange Management laws and by-laws last month. During the talk, a member of MICPA the high rate at which Myanmar businesses are borrowing from the WB and ADB.
Maw Than, a member of board of director from Central Bank of Myanmar (CBM), said: “The WB and ADB are lending money to Myanmar at a six-per cent interest rate. That rate is high.”
Sett Aung, vice chairperson of CBM said: “An interest rate of six per cent is high. But if they borrow the money from local banks, the interest rate would be 13 per cent. If they borrow money in US dollars, the interest rate is six per cent. They think it is good for them. It is not good considering the laws that apply. Foreign banks give loans depending on fluctuating exchange rates and inflation rates. If we take out a loan with kyats, the interest rate will depend on the inflation rate and exchange rate in Myanmar. We make a profit if we pay back loans while the exchange rate is low. If the exchange rate is high, it will be a big problem.”
In response to a request for comment from the Daily Eleven, ADB said the interest rate is confidential and cannot be public about it. They only announced the interest rate of the government’s loans.
A representative from Yoma Group said its intention to get a loan from the International Finance Corporation (IFC) and ADB is to contribute to long-term development projects in Myanmar, to strenghten connectivity in Southeast Asia, to create job opportunities and to enhance urban development in Yangon. The representative could not reveal Yoma Group’s interest rate or whether it is attractive rate for the company.