Deal signed to clear Myanmar debt, allow new loans

YANGON, Myanmar (AP) - The World Bank has announced a long-awaited deal to allow Myanmar to clear part of its huge, decades-old foreign debt, opening the door for much-needed lending to jump-start its lagging economy.

The bank's Washington headquarters announced on Sunday that the Japan Bank for International Cooperation, will provide a bridge loan to Myanmar to allow it to cover outstanding debts to the World Bank and the Asian Development Bank, which total US$900 million (S$1.1 billion).

Myanmar stopped payments on its old loans in 1987, making it ineligible for new development lending.

The deal is a major breakthrough for Myanmar, with loans likely to go to upgrading its dilapidated infrastructure. The knock-on effect would be to bring in more foreign direct investment, already attracted by the country's relatively low-cost economy.