Myanmar's Falling Foreign Debt Masks a Growing Squeeze on Dollars and Household Budgets

Debt falls while the pressure to pay grows

Myanmar paid $5.201 billion in principal and $650 million in interest on external debt with longer maturities in 2024, according to the World Bank's International Debt Report 2025. Together, those payments reached $5.851 billion as conflict, restrictions on imports and shortages of foreign currency put businesses and households under mounting strain.

The country's total external debt fell from $19.712 billion in 2021 to $12.854 billion in 2024 in the report's country table, a reduction of about 35 percent. Yet public and publicly guaranteed external debt moved in the opposite direction, rising from $6.047 billion to $7.253 billion. Much of the decline came from debt owed by private borrowers without a government guarantee.

Figures attributed to a World Bank release on November 5 put foreign debt at about $10.8 billion in 2025, down from $13.5 billion in 2021, and describe $10.3 billion, or 95 percent, as public or publicly guaranteed. Those figures differ from the annual report's totals and composition; the relationship between the two sets of figures has not been explained.

For people trying to buy food, fuel or medicine, the immediate problem is access to money and goods. Paying overseas creditors uses foreign currency that businesses also need for imports. At the same time, Myanmar's government faces a widening budget deficit and limited access to fresh international financing.

The World Bank's June 2025 economic assessment recorded inflation of 34.1 percent in the year to April. A smaller foreign debt total is arriving alongside rapidly rising living costs, rather than an easing of household hardship.

Who is actually repaying the debt?

The World Bank's International Debt Report 2025 separates government obligations from borrowing by private businesses. External debt means money owed to creditors outside the country. Publicly guaranteed debt includes loans for which the government has promised to pay if the borrower cannot.

Private borrowers without government guarantees accounted for $4.826 billion of Myanmar's $5.201 billion in principal repayments during 2024, about 93 percent. The public and publicly guaranteed sector repaid $375 million in principal and paid $248 million in interest, bringing its combined payments to $623 million.

Private debt without government guarantees fell from $9.858 billion in 2021 to $4.226 billion in 2024. That $5.632 billion decline explains much of the reduction in the country's foreign debt, while the public and publicly guaranteed category increased by about 20 percent.

Myanmar received $2.571 billion in new loan disbursements with longer maturities during 2024, against $5.851 billion in principal and interest payments. On those categories alone, payments exceeded new lending by $3.280 billion. For the public and publicly guaranteed sector, however, new disbursements of $745 million exceeded its $623 million in payments. The sharpest recorded drain was therefore among private borrowers.

A public account of Myanmar's repayments described roughly $650 million as combined annual principal and interest, or about $1.9 million a day. The annual report records $650 million as interest alone, with principal listed separately. Payments are made on contractual dates, so a daily average describes their scale rather than a daily repayment schedule.

Japan and China remain central creditors

Japan remains a major creditor after cancelling more than 300 billion yen, approximately $3 billion, of Myanmar's debt in 2013. That cancellation helped reopen access to international financing. Japan subsequently supported special economic zones, railways and electricity infrastructure, before suspending new loans after the military coup in 2021.

A detailed creditor breakdown accompanying the November figures puts debt owed to Japan's government at $3.858 billion. It puts obligations to Chinese creditors at about $1.579 billion, comprising $397.7 million owed to government institutions and $1.182 billion to private institutions. These figures describe different creditor categories from the annual report's country totals.

Chinese lending has financed energy facilities, pipelines and other infrastructure associated with the Belt and Road Initiative. Payments reportedly reduced debt owed to Chinese creditors from around $3 billion in 2021 to roughly $1.5 billion in 2025.

The World Bank's annual table records $3.402 billion in bilateral debt, meaning borrowing from other governments, and $3.291 billion in multilateral debt, meaning borrowing from international institutions, for 2024. Together, these accounted for most of the $7.253 billion in public and publicly guaranteed external debt.

The November figures also put combined obligations to the World Bank and International Monetary Fund at $3.8 billion. In the annual report's 2024 table, the World Bank is listed at $584 million and IMF credit at $762 million, with another $493 million recorded separately as Special Drawing Rights allocations. These IMF reserve assets give countries access to foreign currency and are recorded separately from ordinary loans.

Why fewer loans can mean less money for imports

Myanmar's economy needs foreign currency to pay for imported fuel, medicine, machinery and production materials. Overseas debt payments draw on that same scarce resource. Businesses can struggle to obtain dollars even when they have enough kyat to cover the local price of a purchase.

A local economist, speaking anonymously because of safety concerns, described the pressure created by repayments during an economic crisis and a shortage of foreign currency.

Having to make loan repayments during an economic crisis and foreign currency shortage has driven the country into trouble,

The economist also said Myanmar depends on concessional loans and development grants to finance major infrastructure. Concessional loans generally offer cheaper interest or more time to repay than commercial borrowing, while grants require no repayment.

Myanmar's access to financing has narrowed since the coup, alongside sanctions, the departure of foreign investors and worsening conflict. Armed fighting around economic projects has delayed development, limiting the benefits those projects were expected to bring.

The result is pressure from two directions: existing borrowers still face payment obligations, while new money becomes harder to secure. For an importer, that can mean delaying an order, purchasing fewer goods or paying more to obtain foreign currency.

A steadier kyat has come with tighter controls

The World Bank's Myanmar Economic Monitor, published in June 2025, says the kyat had stabilized against the US dollar on parallel markets since October 2024. The bank attributed that stability to restrictions on imports and currency transactions, action against parallel currency trading and foreign currency sales by the Central Bank of Myanmar.

The authorities also used an export first policy and promoted payments in Thai baht and Chinese yuan to reduce reliance on dollars. These measures restricted demand for foreign currency while the central bank supplied some currency to the market.

Multiple exchange rates continued to distort prices and discourage investment, according to the bank. When businesses face different rates depending on how they obtain foreign currency, their costs become harder to predict. A relatively steady market rate can coexist with difficulty getting permission or currency to make a purchase.

The bank warned that further restrictions on trade and foreign exchange could worsen shortages of basic goods and imported raw materials, increase consumer prices and weaken business confidence. Myanmar's currency pressure is therefore visible through restricted access to imports as well as through changes in the exchange rate.

Households face inflation above 34 percent

Consumer prices rose 34.1 percent in the year to April 2025, compared with 24.7 percent over the previous year, the World Bank found. The increase of 9.4 percentage points shows how much faster living costs were rising.

Food inflation reached 29.5 percent. Prices outside the food category rose 36.4 percent, up from 21.6 percent previously, as transport disruption and expensive fuel increased costs.

Conflict damaged supply routes, import restrictions limited access to goods, and earthquake related shortages affected areas including Mandalay and Sagaing. Earlier kyat depreciation also continued to feed through into prices after the currency had become more stable.

A household whose income stayed unchanged could buy substantially less than a year earlier. Shops and manufacturers also faced higher transport and input costs, creating pressure to raise prices or reduce activity.

Debt repayments add to competition for foreign currency within this wider crisis. The World Bank's assessment identifies disrupted supply, restricted trade, earthquake damage and earlier currency losses as concrete drivers of the price increases people were already experiencing.

A trade surplus built partly on fewer imports

Myanmar recorded an estimated merchandise trade surplus of $1.3 billion between October 2024 and March 2025. The balance had been close to zero in the same period a year earlier.

Exports rose 7 percent, supported by agricultural sales, while imports fell 12 percent. Both changes helped move trade into surplus: more goods were sold abroad, and fewer were purchased from outside the country.

Export earnings bring in foreign currency, which can support imports and overseas payments. Falling imports reduce immediate demand for that currency, but they also reduce the supply of goods and materials entering Myanmar.

The World Bank warned specifically about shortages of imported raw materials. For businesses dependent on those inputs, a smaller import bill can mean less stock to sell or fewer materials for production. The trade figures show a country conserving foreign currency partly through reduced purchasing from abroad.

The budget gap is shifting pressure back home

The World Bank projected Myanmar's budget deficit at 6.9 percent of gross domestic product in the fiscal year ending March 2026, compared with 5.1 percent in the previous fiscal year. A deficit means the government spends more than it receives and must find financing to cover the difference.

Reconstruction and rehabilitation spending were expected to rise. The bank projected public debt at around 63 percent of GDP, including both domestic and external obligations, and expected financing of the deficit to remain largely dependent on the central bank.

The June assessment also projected external financing, including new borrowing from China, at 1.0 percent of GDP for fiscal 2024/25. It estimated domestic public debt at about 43.1 percent of GDP and external public debt at about 19.3 percent for that year, showing the growing weight of borrowing at home.

Deputy finance minister Kyaw Htin later told lawmakers that expected funding from China, India and Russia had failed to materialize as projects encountered security problems. The Ministry of Finance and Revenue linked the larger budget gap to that shortfall.

Lawmakers approved export credit from Belarus in October amid criticism that expensive repayments would deepen public hardship. Export credit finances purchases from the lending country's exporters. The amount, interest rate and repayment timetable were not given, leaving the future payment burden unclear.

How the financing squeeze developed

Myanmar's current position reflects changes in both access to new money and the structure of existing debt. The sequence connects earlier debt relief, the interruption of financing after the coup and the more recent pressure on imports and public spending.

• 2013: Japan cancelled more than 300 billion yen in debt as Myanmar returned to international financing.
• 2021: The military coup was followed by Japan's suspension of new loans and growing difficulty securing international financing.
• 2021 to 2024: The World Bank's annual table records total external debt falling from $19.712 billion to $12.854 billion, while public and publicly guaranteed debt increased.
• October 2024 to March 2025: Myanmar recorded an estimated $1.3 billion merchandise trade surplus as exports rose and imports contracted.
• April 2025: Annual inflation reached 34.1 percent.
• October 2025: Lawmakers approved export credit from Belarus.
• March 2026: The World Bank projected the fiscal year would end with a budget deficit equal to 6.9 percent of GDP.

The central change is that falling external debt has coincided with higher public obligations, restricted imports and greater dependence on domestic financing. Debt totals, repayment flows and household prices each reveal a different part of that pressure.

Key Points

• The World Bank's annual report records Myanmar's external debt at $12.854 billion in 2024, down about 35 percent from 2021.
• Public and publicly guaranteed external debt rose to $7.253 billion over the same period.
• Payments on debt with longer maturities reached $5.851 billion in 2024, with private borrowers accounting for most principal repayments.
• November figures put 2025 debt at about $10.8 billion, using totals and categories that differ from the annual report.
• Inflation reached 34.1 percent in April 2025 despite greater exchange rate stability under tight controls.
• The World Bank projected a budget deficit of 6.9 percent of GDP for the fiscal year ending March 2026.