Myanmar

Key development challenges

Myanmar is a lower middle-income country. Its $62 billion GDP (2022) accounts for 1.7% of the regional economic output of Southeast Asia. With a population of more than 54 million, Myanmar’s GDP per capita is $1,149 — the lowest in the region.

After a series of shocks, including the Covid-19 pandemic, the February 2021 military coup, internal conflict, and displacement of ethnic populations, Myanmar has seen a reversal of much of its development progress. Due to the coup, the latest data on the economy is unreliable. The World Bank estimates that poverty may have doubled, with about 40% of the population living below the national poverty line in 2022. The number of internally displaced persons was estimated at 2.7 million at the end of 2023.

From 2015 to 2022, more than 16,000 official development finance (ODF) projects were implemented by 76 development partners in Myanmar, amounting to a total of more than $20 billion disbursed, or an average of $2.5 billion per year.

Overview of development finance trends

In real terms, ODF flows to Myanmar grew from 2015 and peaked in 2020, before halving in 2021 after the coup. ODF to Myanmar halved again in 2022, with aid levels now 60% below the pre-coup average. Myanmar received the third-highest amount of ODF in the region in 2020, but this fell to sixth-highest in 2021. ODF disbursed to Myanmar averaged $2.5 billion per year, accounting for around 6% of regional ODF through the period.

There was a significant decline in spent ODF in 2021 and 2022, with grants, concessional loans, and non-concessional loans decreasing across all major development partners, including China, the World Bank, and the Asian Development Bank (ADB). Japanese and US support to Myanmar has declined the least among major donors, with both maintaining key infrastructure and humanitarian aid programs.

Commitments roughly tracked disbursements between 2015 and 2020. Since 2021, however, significant commitments of $8.1 billion were offered by China via non-concessional loans for the Mandalay–Kyaukphyu railway project and the Kyaukphyu Special Economic Zone deep-sea port project. But no disbursements on these projects have been registered in the period.

Main development partners

Japan averaged $616 million disbursed annually, while the next-largest development partner was China, which averaged $370 million. The second tier of development partners comprised the United States, the World Bank, the Asian Development Bank, and the United Kingdom, which combined accounted for about 32% of total development financing spent in the country during 2015–22.

Between 2015 and 2022, Japan’s disbursements in Myanmar were mainly focused in the transport and storage sector (27%) and the industry, mining and construction sector (13%). These were infrastructure-focused projects primarily funded through semi-concessional loans and some smaller grants. In 2019, Japan became the largest development partner in Myanmar, overtaking China after Japanese ODF more than doubled in comparison to 2015 levels. Among the most notable projects are the Yangon–Mandalay Railway Improvement Project, which started in 2017, and the Covid-19 Crisis Response Emergency Support Loan disbursed in 2020.

China’s role in Myanmar’s development dates back to 1988, when Myanmar was internationally isolated following a coup. China’s development finance has focused on industry, mining and construction, with bilateral oil and gas projects accounting for more than half of total spending between 2015 and 2022. The agriculture, forestry and fishing sector and the energy sector have also received significant funding from China. In 2022, public records of Chinese ODF support to Myanmar ceased, however financing is likely still flowing.

The World Bank’s development finance to Myanmar during 2015–22 was mostly directed towards the energy sector (33%) and the government and civil society sector (19%). However, the Bank’s support to Myanmar dropped sizably to $7.6 million in 2022, down from a high of $332 million in 2020. While energy sector financing had previously been the focus of World Bank spending in Myanmar, support for this sector dropped from a pre-coup average of $68 million to less than $1 million in 2022.

Between 2015 and 2022, 82% of the development support provided to Myanmar was concessional in nature, much higher than the regional average of 46%. In 2022, 100% of development finance was concessional, which is explained by the cessation of a significant amount of non-concessional development support in response to the military takeover.

Sectors

Compared to total ODF provided to other countries in Southeast Asia, ODF to Myanmar is focused on acute poverty reduction and humanitarian aid rather than economic development. China’s large investments also pushed industry, mining, and construction sector flows to above the regional average. Development finance was well above the regional average in the health, humanitarian aid, and agriculture, forestry and fishing sectors, while the energy, transport and storage, and banking and financial services sectors were substantially below the regional trend. Since the coup, humanitarian aid has become the focus of ODF flows. Emergency relief — including shelter, water, and food for crisis-affected people — accounted for 21% of disbursements in 2022.

The government and civil society sector received the largest contribution due to the provision of general budget support, totalling 18% of ODF flows over the period. This included a $315 million concessional loan from the Japan International Cooperation Agency in 2020 to support the country’s Covid-19 response, and two general budget support loans from the IMF Concessional Trust Funds in 2020 and 2021.

The industry, mining and construction sector received funding above regional trends due to the joint oil pipeline project between China National Petroleum Corporation and the Myanma Oil and Gas Enterprise. The energy sector, which was substantially below regional trends in terms of development finance, mainly focused on the construction of electricity infrastructure.

Climate

Total climate financing constituted only 15% of all development disbursements in Myanmar during 2015–22. “Principal” climate financing constituted just under 3% of total disbursements. Among the most notable climate projects were the $157 million Greater Yangon Water Supply Improvement Project financed by Japan, and the $157 million Livelihoods and Food Security Trust Fund for the rural poor and vulnerable, from the United Kingdom.

Most of the climate development finance in Myanmar was invested in the energy sector, notably in electricity grid improvements, hydro-electric power plants, and energy planning and policy. Total climate development finance was split roughly between grants and concessional loans, with the top development partner being Japan by a large margin, followed by the United Kingdom and the World Bank.

Gender

Between 2015 and 2022, Myanmar received $3.4 billion in gender development financing. In the half-decade before 2020, the country saw an average of $916 million per year in gender-earmarked financing. Since 2020, annual gender development financing has declined significantly to $681 million. The majority of gender financing flowing into Myanmar comes in the form of “significant” tagged funds, with this category making up 66% of total gender flows.

From 2020 to 2022, flows of development finance with a “principal” focus on gender declined by 86%, from an annual average of $178 million to $69 million. The largest “principal” gender project in Myanmar was the $43 million Fund for maternal and child health needs project, funded by the United Kingdom.

Malaysia as an ODF provider

Although Myanmar is overwhelmingly an aid recipient, Naypyidaw has contributed annual funding to the ASEAN Coordinating Centre for Humanitarian Assistance on Disaster Management, which aims to facilitate cooperation and coordination among ASEAN countries and with relevant United Nations and international organisations on regional responses to disasters and emergencies.