The World Bank is returning to Burma after an absence of more than 20 years with a mission on Wednesday to assess the country’s economic readiness and indebtedness. Its return marks a crucial watershed in Burma’s economic development, though the full impact will take many years to realize.
The bank’s main objectives are to gather information and assess the quality of Burma’s economic statistics which have long been ridiculed in international economic circles.
But its first priority is to assess the country’s overall international debt position, according to World Bank sources.
The Burmese government recently announced that it owed seven billion dollars to foreign and international creditors, some five billion dollars to Japan—by far the biggest debt—and a further billion to the World Bank and the Asian Development Bank combined.
This debt prevents any further grants or loans being made by international institutions in the near future.
Once the debt position is established, it is possible that Burma could qualify for “debt-forgiveness” or a restructuring of the loans.
But already for the Burmese government there are positive signs—Japanese business organizations are planning to find a way to take over Burma's debt to Tokyo—and according to some sources may also be prepared to lend the government the funds necessary to pay off the debt to both ADB and the World Bank.
That’s how much potential Japanese business sees in investment and trade in Burma.
Only by preparing reliable statistics can international financial institutions and foreign investors be confident about the country’s real economic potential. The World Bank will sit with government officials for the next two months doing exactly that.
It’s an information-gathering trip rather than a exploratory one, said a source in the bank. It’s about confidence building—funding actual projects may be years away. But in the meantime there are two key areas that the bank could get involved in—one is offering technical assistance, and the other is coordination of the international aid effort.
Everyone involved in aid, investment and trade with Burma understands the acute lack of expertise in the country, especially within the bureaucracy. There are certainly a few good civil servants, but these are far too few to cope effectively with the changes that the government is planning.
This lack of capacity and expertise is the greatest obstacle to the reform agenda succeeding and was the International Monetary Fund’s blunt assessment after its mission earlier this year.
The Burmese government understands that only too well. But while sanctions are in place, little can be done to improve the situation, though in the past two years more and more government officials have gone to Asian countries for training, often financed by the Japanese government aid agency (JICA).
That of course could all well change after the forthcoming by-elections. The European Union and Australia are both anxious to support what is called “capacity building”—training and the transfer of expertise.
The U.S. is also on the case, with a “scoping team” of USAID and State Department officials in Burma this week to assess what areas they might fund once there is a move to reduce sanctions. They are planning major aid initiatives.
But as the international donors fall over themselves to help Burma with funds and expertise, there is a very real danger of this leaving chaos in its wake.
Already the long term aid workers in the country are complaining of the lack of coordination in the aid effort. There is a lack of communications between organizations as they compete with each other, compelled by the need for speed, according to some donors.
But that is exactly the approach that will leave the country in a mess. A clssic example of that is the United Nations Development Program’s recent unilateral announcement of a Donor’s Conference to be held in Naypyidaw later this year.
There had been no consultation with other agencies such as the official British aid office Dfid, the EU or the World Bank.
What was worse was it was news to the Burmese government as well. Not that this is a bad idea—quite the contrary—but it has to be thoroughly planned before being announced and carried out.
While the goal of halving poverty by 2015 is admirable, its viability is highly questionable. Meetings in other countries, especially in Asia (Cambodia, Indonesia and Vietnam in the past), have been coordinated by the World Bank, which has had substantial experience in this area.
Now that the Bank is returning to Burma, this would be a crucial role for it, especially in the coming months.
But above all, the Burmese government has to be central to any discussion and decisions in this matter. It is up to the Burmese authorities to decide aid and development priorities and projects, and not be railroaded by the international donors’ good intentions.
The Burmese government is planning to create a deputy minister for aid coordination within the planning ministry, according to senior government sources. This should be done as a matter of urgency as it would help give the international community’s efforts to assist Burma some focus.
A deputy minister is probably the best level for this as there has to be some credibility attached to the post. It should not be symbolic.
The role of Kyaw Thu, also a deputy minister, during the Cyclone Nargis crisis and collaboration among the United Nations, Burma and its regional neighbors in the Tripartite Core Group was exemplary.
The Burmese authorities would be well advised to take this experience on board as they prepare for the tidal wave of aid that is coming in the near future.
Larry Jagan is a former BBC regional correspondent who is based in Bangkok and has extensively covered Burma issues.