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World Bank, Asian Development Bank Freeze Funds to Myanmar to Shun Junta

This screengrab provided via AFPTV and taken from a broadcast by Myitkyina News Journal on March 27, 2021 shows security forces crack down protesters during a demonstration against the military coup in Myitkyina in Myanmar's Kachin state.
This screengrab provided via AFPTV and taken from a broadcast by Myitkyina News Journal on March 27, 2021 shows security forces crack down protesters during a demonstration against the military coup in Myitkyina in Myanmar's Kachin state.

Moves by the World Bank and Asian Development Bank to freeze funds to post-coup Myanmar could make many vulnerable communities worse off even as the lenders look for ways to keep some projects going without the government, analysts and experts say.

The World Bank said February 19 it was freezing outlays to Myanmar “as we closely monitor and assess the situation.” The ADB followed suit March 10, putting a hold on new contracts and funds to existing public-sector projects.

Together, the institutions have put hundreds of millions of dollars in aid to Myanmar on hold to avoid working with the country’s new military junta, which has shot and killed more than 400 people since seizing power February 1 to quell protests, according to local media and activists.

Counting the cost

Losing the average $500 million to $600 million both bank earmark for Myanmar each year will not on its own cripple the country’s $76 billion economy, said Bryan Tse, country analyst for the Economist Intelligence Unit and a former consultant specializing in international development projects.

However, much of the work they fund does have an outsized impact on the communities they target, he added, from malaria treatment in the south to harm reduction programs for drug addicts in the north and village farming projects across the country.

“If these projects get suspended for an extended period of time, then that would have an impact on people’s well-being, and these are things that are not necessarily visible in the headline GDP [gross domestic product] figures,” Tse said.

“If you are part of that community, then there will be a direct impact. So, at the end of the day, it’s not necessarily the broad economy but the people, especially the vulnerable population, that will suffer the most.

Their projects are also often of the type the private sector or the state are unlikely to pick up on their own, Tse added.

“These are not the kind of populations that would generate a lot of revenue for private business, or it may not even be worth it for the government to do,” he said. “That’s where a lot of these development organizations step in.”

Their grants and loans span major infrastructure projects, too, from highways to power grids.

The banks have not said exactly how much money is on hold.

The World Bank would not elaborate, and referred VOA back to its February 19 statement, which offers no figures or any other details. The ADB did not provide VOA with figures either.

According to its website, the World Bank has 24 active projects in Myanmar worth a combined $2.73 billion and another 13 worth $1.68 billion in the pipeline. The ADB says it has committed $3.57 billion to Myanmar over the years up to the end of 2019, with 99 active or approved projects as of February and 10 more planned.

Alternate spending

Moe Thuzar, a Myanmar analyst for the Institute of Southeast Asian Studies in Singapore, said the banks will try to keep projects going where they can find ways around the military-run government.

In its statement, the World Bank said it was bolstering efforts to monitor projects already underway to ensure compliance with the group’s policies, while the ADB’s announcement left open the possibility of continuing with private-sector programs.

“They’re not halting projects that would affect the life of communities, of grassroots, of people across the country in these difficult times and where I think direct delivery or assistance can be done without necessarily having [to work with] entities that purport to represent the government as it is right now,” Moe Thuzar said.

“It’s about the ‘do no harm’ principle, which really is not to let any action taken by the banks, by these financial institutions, [have] any negative or adverse consequences on the people,” she added.

However, as most of the banks’ grants and loans go to, or at least through, government bodies, many of their projects will surely grind to a halt, said Jared Bissinger, a development economist who has done consulting work for the World Bank, United Nations and other organizations in Myanmar.

While health care projects might lend themselves to new partnerships with private clinics and independent charities that can help to keep them running, others do not.

“For a lot of what they do it’s going to be very difficult if not impossible,” Bissinger said. “You’re not going to be working on the national electrification grid without the government; it’s just not possible.”

Moe Thuzar said strikes at local banks, part of a nationwide civil disobedience movement against the junta, will make it hard to send money to anyone in Myanmar, the government or otherwise. She said local charities are also coming under added scrutiny from authorities for foreign ties, making any activity with even a hint of resistance to the new regime risky.

Earlier this month the junta arrested a local employee of the Open Society Foundation, a U.S.-based philanthropic group that champions democracy and human rights around the world. State-run media claimed the group ran afoul of fund-transfer rules, which the group denies.

Donors’ dilemma

The coup also risks derailing donors’ projects to help Myanmar combat the COVID-19 pandemic, which has hit the country harder than most others in Southeast Asia.

The World Bank and ADB had both committed tens of millions of dollars to the effort ahead of the coup.

“It’s a no-win situation,” Bissinger said.

“The World Bank just can’t continue working with and thereby sort of implicitly endorse this military-controlled government,” he said. “But at the same time, by not doing that, yeah, it’s going to interfere with plans to address the COVID pandemic. So, it really does put organizations like the bank in a really difficult position.”

Myanmar’s military claims it took power because the country’s civilian government failed to address its allegations of rampant fraud in last year’s general election, which the National League for Democracy party of Nobel laureate Aung San Suu Kyi had won in a landslide. Local and international election monitors had raised concerns with the poll but said the results on the whole did reflect the will of the people.

The U.N., local media and nongovernment groups say police and soldiers have killed hundreds and arrested thousands since the coup in a failing bid to quash near-daily protests and strikes. The U.S., European Union and others have imposed sanctions on the top generals and some of their business interests in response.