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Press Release

June 1, 2020

Sustain Myanmar's Spirit for economic recovery from COVID-19 epidemic loss
- JICA provides 5 billion JPY low-cost financing to SMEs under a new emergency program -

The Japan International Cooperation Agency (JICA) is providing 5 billion JPY (approx. 64 billion MMK) low-cost financing with terms and conditions favorable to SMEs to support the continuation of their business activities amid the severe economic situation caused by COVID-19. This emergency program is financed through the restructuring of ongoing SME financing project known as "JICA SME Two-Step-Loan Phase 2" started in 2018 to respond quickly to the serious situation of SMEs.

As the global pandemic is bringing about health and economic challenges all over the world, many businesses in Myanmar, especially SMEs with limited buffers are struggling to tackle this unprecedented situation. The Government of Myanmar is proactively responding to these challenges with strong political leadership embodied in "COVID-19 Economic Relief Plan (CERP)" published on April 27th.

The newly introduced emergency program is operated through Myanma Economic Bank and other commercial banks participating in the project, aiming at supporting the Government of Myanmar's initiative to ease the impact on private sector as manifested in CERP.

It can be characterized by "low-cost", "flexible use" and "medium-to-long maturity".

"low-cost" - Baseline interest rate is 5.5% as of May 2020 (minimum deposit rate + 0.5%=5.5% as of May 2020)"

"flexible use" - The loan proceeds can be utilized for both working capital and fixed assets investments without any limitations on the ratio between the two

"medium-to-long maturity" - Maturity is 1 to 5 years, including appropriate grace period that will be set to facilitate repayment by SMEs.

Also, the majority of the funds is available for loans with relaxed collateral conditions to improve financial access of small-scale SMEs with limited collaterals.

"SMEs, accounting for 99% of the businesses, are a crucial part of the entire economy and important source of living for many people in the country," said Mr. SAKAKURA Noriji, Chief Representative of JICA Myanmar Office. "JICA is committed to continuing providing swift and strong support to SMEs going forward so that we can overcome this unprecedented economic crisis and build a strong foundation for sustainable, inclusive and dynamic economic growth."

The 5 billion JPY loan is the first large scale financial support from JICA in the series of upcoming COVID-19 response projects in the pipeline. JICA's entire support package, which includes both ongoing and upcoming projects, will cover from emergency response to recovery stage to pave the way for resilient society and protect hard-won development gains in a sustainable manner.

Although the historical pandemic is disconnecting global economy, JICA will continue to stay together with people in Myanmar.




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