Myanmar is forcing businesses and banks to stop paying international loans

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Myanmar is forcing businesses and banks to stop paying international loans

“According to foreign currency law and foreign currency management rules, the repayment of foreign loans including original and interest values should be suspended and licensed banks should rearrange with their customers … regarding repayment schedule,” the central bank statement said. Central bank officials did not answer calls seeking comment.

To relieve some of that pressure, the central bank has announced a series of orders on local businesses to deposit and exchange foreign currency at local banks within one working day, and instructing ministries and local governments not to use foreign currencies for domestic transactions.

Last year, the central bank briefly tried tethering the kyat to a reference rate against the dollar after a slump in the exchange rate. The official central bank exchange rate for the kyat is set at 1,850 per dollar but has tended to be well below the unofficial black-market rate.

Story Highlights

  • The directive was issued by the central bank on July 13, according to the news source Myanmar Now. The paper, which was spreading on social media, could not be independently verified by Reuters.

  • The kyat currency’s plummet against the dollar has driven up fuel and food prices in a country already in crisis since the military seized power in a brutal coup last year, halting a decade of political and economic reforms.