The World Bank’s Board of Executive Directors today approved a US$100 million credit to support Myanmar in improving the access of families and small and medium-sized businesses to financial services.
Myanmar’s Financial Sector Development Project aims to promote the development of a sound and stable financial sector, includes reforms to increase the provision of banking services and access to loans and financial products across the country, and to develop the country’s nascent microfinance and insurance sectors.
“The project will help increase access to finance for households and small and medium-sized enterprises by reforming state-owned banks, strengthening the financial sector’s legal and regulatory frameworks and modernising the financial sector infrastructure,” said U Maung Maung Win, Deputy Minister for Planning and Finance. “These reforms are expected to extend the range of basic financial products and services to underserved areas and populations.”
Since 2012, private banks have rapidly expanded their operations. More than 1.4 million debit cards have been issued for the first time, and thousands of ATMs have been set up. Credit to the private sector has grown steadily, albeit from a low base.
Still, Myanmar’s financial sector does not yet effectively meet the demands of the country’s growing economy. Myanmar has some of the lowest levels of access to financial services in the world.
Fewer than 30 per cent of adults can access financial services, and the rates are even lower in rural areas. Businesses identify the lack of access to finance as the largest constraint to doing business in the country.
“As Myanmar implements the Financial Sector Development Project, people in communities across the country will gain access to basic financial services and small loans,” said Ulrich Zachau, the World Bank Country Director for Southeast Asia. “Improved access to credit will mean higher incomes and more jobs. Farmers, small businesses and low-income households will benefit. The World Bank Group is pleased to help finance the project.”
The credit will come from the International Development Association (IDA), the Bank’s fund for the poorest. The terms for the IDA credit include a maturity of 38 years, with a grace period of six years and a zero-interest rate.