Credit Vital To Boosting Development In Myanmar
Credit Vital To Boosting Development In Myanmar, Economist Says After UN-Backed Trip
New York, Dec 23 2009 1:10PM With 70 per cent of Myanmar’s population dependent on agriculture, credit reform could help the Asian nation reach its full productivity potential and enhance development, Nobel Prize-winning economist Professor Joseph Stiglitz said after a United Nations-backed visit to the country.
“If you’re going to reduce poverty and meet the Millennium Development Goals [MDGs], a focus on agriculture is absolutely essential,” Mr. Stiglitz told reporters after his trip.
Surveys, he pointed out, have shown that the cost of credit is very high in Myanmar, with many farmers and casual labourers having to borrow money at interest rates of 10 per cent or more per month.
The loans are reminiscent of “pay day” loans in the United States, he said, except that the interest rates charged in Myanmar are even more “usurious.”
While in the country, the economist met with Government officials and academics, as well as visiting projects in rural areas.
Farmers, he said, told him that while irrigation had increased their productivity, “because they could not get the credit to buy fertilizer and high quality seeds, the full potential was not being realized.”
While productivity is high, “what is clear is that it’s not as high as it could be,” Mr. Stiglitz underlined. “They have made some impressive successes, but [they are] not living up to their full potential.”
He and other experts travelled to Myanmar at the invitation of the Economic and Social Commission for Asia and the Pacific (ESCAP), as part of a development partnership requested by the Government.
The foundations of the four-day visit, according to ESCAP Executive Secretary Noeleen Heyzer, were laid shortly after the devastating Cyclone Nargis struck Myanmar last year when the UN body and the Government launched their first development partnership seminar.
Mr. Stiglitz, who chairs the UN Commission of Experts on Reforms of International Finance and Economic Structures, noted that the effects of the devastating cyclone – including the devastation of the already-fragile credit system and fertilizer supply – can be felt long after the disaster itself.
Nargis showed how “even a country that is not integrated into the global economy is being affected by the same global recession that every country in the world has been,” he said.
Acknowledging his role as an “outsider” in the talks in Myanmar, he said that “while [an outsider] can’t bring the knowledge of the details that the people within a country have… he can share the experiences” of enormous success and failures in development and the management of natural resources.
Mr. Stiglitz also underlined how the economic and political processes of countries are intertwined.
“If one wants to achieve security stability, economic security, economic stability [and] sustainable development, then one has to engage in participative processes in trying to absorb some of the lessons of those countries that have been successful and absorb the lessons also of countries that have been failures so you can try to avoid those mistakes.”