WASHINGTON (Reuters) - The World Bank said on Thursday it was in the process of returning to Myanmar after 25 years, but the isolated Southeast Asian nation will first have to clear its arrears to global financial institutions before the bank resumes lending.
Other multilateral lenders such as the Asian Development Bank have also taken preliminary steps towards resuming activities, while the European Union has started to unwind sanctions against Myanmar, after a new civilian government began introducing democratic reforms in late 2011.
“We are encouraged by developments in Myanmar,” said Pamela Cox, World Bank vice president for East Asia and Pacific.
“We have begun the process of re-engaging with the government to support reforms that will benefit all of the people of Myanmar, including the poor and vulnerable,” she said in comments posted online.
The World Bank ceased operations in Myanmar, formerly known as Burma, in 1987. Foreign donors have been reluctant to help Myanmar, citing its human rights record, and many maintain economic and military sanctions on the country.
As Myanmar pursues dramatic reforms, it is opening up a long-stagnant economy and attracting a flood of foreign investors interested in tapping its resources.
One of Asia’s richest countries early in the 20th century, Myanmar is now one of the world’s poorest after half a century of often brutal military rule. One-third of its population of about 60 million live below the poverty line.
MYANMAR‘S DECADE-OLD DEBT
The World Bank said it planned to conduct reviews of Myanmar’s economy, including its financial and banking sectors, and will publish these.
Myanmar owes some $11.02 billion in external debt run up decades ago, while its foreign currency reserves are a little over $7 billion.
The World Bank said it will also provide technical assistance on economic incentives to help with the peace process in border areas, drawing from experience around the world on conflict and security.
Elections last year which produced a civilian government, but left Myanmar’s military junta in control, started the country’s move towards democracy.
It was the first election since the military refused to recognize the results of a 1990 democratic election, won by Aung San Suu Kyi’s National League for Democracy.
The government has since released hundreds of political prisoners, including Nobel Peace prize winner Suu Kyi after nearly 20 years in detention, and eased media restrictions.
U.S. sanctions could begin to come down if Myanmar’s by-elections scheduled for April 1, contested by opposition leader Suu Kyi, are fair and open. U.S. Secretary of State Hillary Clinton made a landmark visit to Myanmar last year.
Neighboring China is its biggest political and economic ally and has capitalized on the West’s reluctance to trade with the junta. But relations with Beijing are strained after the new government last September suspended construction of a hydroelectric dam being built with Chinese help.
Reporting by Lesley Wroughton, Editing by Gary Crosse and Michael Perry