What's Happening?
Myanmar's foreign debt decreased from $13.5 billion in 2021 to $10.8 billion in 2025, according to World Bank data released on November 5. Public and public-guaranteed loans constitute 95% ($10.3 billion)
of this total, primarily from multilateral lenders like the World Bank and International Monetary Fund ($3.8 billion), and bilateral creditors such as Japan and China (over $1.5 billion each). Despite this reduction, experts warn that the regime's loan repayments are exacerbating an already severe economic crisis. Post-coup economic mismanagement, coupled with foreign sanctions and an exodus of foreign investors, has plunged Myanmar into a deep economic downturn. The country faces a significant foreign currency shortage, leading to a lack of funds for imports and a severe kyat depreciation. The 2025–26 budget deficit is soaring due to a drop in funding from allies like China, India, and Russia, as key projects face security challenges. The rubber-stamp parliament recently approved short-term export credit from Belarus, a move criticized for potentially deepening public hardships due to high-interest repayments.
Why It's Important?
The decline in Myanmar's foreign debt is misleading, as it is primarily driven by the regime's efforts to make repayments amidst an international aid freeze, rather than economic growth or stability. This situation is critical because it diverts scarce foreign currency away from essential imports, contributing to inflation and shortages of goods. The economic crisis directly impacts the daily lives of Myanmar's citizens, who face rising costs and limited access to necessities. The reliance on high-interest loans from countries like Belarus, in the absence of traditional international funding, indicates a desperate attempt by the regime to secure finances, which could further entrench the country in debt and economic instability. The ongoing armed conflict also disrupts economic projects and trade routes, hindering any potential for recovery and making the regulatory environment highly unpredictable.
What's Next?
Myanmar's economic outlook remains bleak, with continued high country risk due to armed conflict, institutional breakdown, and severe supply-chain disruptions. The government's inability to provide economic stimulus, coupled with weak revenue collection and conflict spending, suggests that the economic crisis will persist. The international community's stance on sanctions and engagement will continue to influence Myanmar's access to international finance and investment. Without a resolution to the political instability and a return to democratic governance, the country is likely to remain one of Asia's most challenging operating environments. The approval of new loans, particularly from non-traditional sources, could lead to increased scrutiny and potential further isolation from Western financial institutions.
Beyond the Headlines
The economic crisis in Myanmar extends beyond mere financial indicators; it reflects a broader collapse of governance and the rule of law following the 2021 coup. The regime's prioritization of debt repayment over the welfare of its citizens highlights the ethical dilemmas faced by international creditors and the impact of their lending policies. The exodus of foreign investors and the disruption of key economic projects underscore the long-term damage to Myanmar's development potential. This situation also reveals the geopolitical dynamics at play, with some countries continuing to engage with the junta while others maintain sanctions, creating a fragmented international response. The economic hardship could further fuel social unrest and resistance, perpetuating the cycle of violence and instability.
