Myanmar’s central bank has ordered borrowers with foreign currency-denominated loans to suspend repayment in order to maintain foreign currency reserves.
Central Bank Deputy Governor Win Thaw issued the order Wednesday, July 13, saying domestic borrowers who have overseas loans must suspend loan and interest payments. He said they should renegotiate their repayment schedules with foreign lenders.
According to Bloomberg, businesses in Myanmar have at least US$1.2 billion (S$1.7 billion) in outstanding US dollar-denominated loans.
The central bank has also changed the rules relating to currency conversion.
In April, all businesses were ordered to convert any foreign currency into Myanmar kyats at the official rate within 24 hours of receiving the currency. But companies in special economic zones and companies more than 10% foreign-owned were exempt from the order.
This week, companies more than 10% foreign-owned saw the exemption removed. They will now also have to convert any foreign currency received into kyats within 24 hours.
These are not the only measures taken by the authorities to help shore up the country’s dwindling foreign exchange reserves.
The junta has already banned the import of cars and what it calls non-essential goods.
According to the Straits Times, automaker Suzuki had to suspend production at its two Burmese factories because it could not import the materials needed to continue production.
The kyat has lost around 60% of its value since the coup. On the black market, one US dollar is worth 2,200 kyats, but the official exchange rate that all businesses must use is 1,850 kyats to the dollar, which is around 16% less.
According to World Bank estimates, Myanmar’s economy shrank by 18% in the year ending September 2021 and it expects the economy to stagnate this year.