Agriculture bank requiring repayment of Covid-19 loans as condition of new borrowing

By Admin 25 Aug 2023

DMG Newsroom
25 August 2023, Sittwe

Some farmers in Arakan State still can’t apply for annual agricultural loans as they have yet to repay loans provided by the government during the Covid-19 crisis.

During the Covid-19 pandemic in 2020, Myanmar Agricultural Development Bank lent 50,000 kyats per acre for farmers in an attempt to mitigate the economic impacts of the pandemic on farmers.

Agricultural loans are provided annually for the monsoon growing season, and farmers are required to pay back the loans of the previous year to be eligible for the next growing season’s disbursement.

Some farmers told DMG they had repaid their agricultural loans from the last year, but had yet to pay back Covid-19 loans, and were thus denied new agricultural loans.

“We struggled a lot to repay last year’s agricultural loans, and we have difficulties to pay back all the loans,” said Daw Phyu Phyu Win from Taung Yin Ward in Kyaukphyu Township.

Borrowers of Covid-19 loans were required to pay the loan and interest within one year, with a monthly interest rate calculated at 500 kyats per 100,000 kyats.

New agricultural loans were previously provided to farmers who had yet to pay back their Covid-19 loans, but this year Myanma Agricultural Development Bank has told Covid-19 loan holders to pay back the loans or be ineligible for new borrowing.

Farmer U Wai Thar Phyu from Ngathaechaung Village in Minbya Township said: “Many local farmers here were denied agricultural loans as they could not pay back Covid-19 loans.”

Some 30,000 farmers took Covid-19 loans in Arakan State, and only around 10,000 of them have paid back the loans, according to Myanmar Agricultural Development Bank.

Manager U Ba Kyaw Sein of the Arakan State branch of Myanmar Agricultural Development Bank said: “We understand farmers have difficulties, but we could do nothing for them as it is an instruction from higher-ups.”

Farmers in Arakan State suffered a poor harvest last year amid increases in prices of agricultural inputs, armed conflict around the time of the harvest, and adverse weather. This year, they were hit hard by Cyclone Mocha and more recent flooding.

The Arakan State Farmers Union has called on the regime to defer the loan repayment period for farmers who have been hit hard by the twin shocks of the cyclone and floods.

“Many paddy farms were damaged by flooding. Farmers have difficulties even to find paddy seeds to replant their farms. So, the majority of them will not be able to pay back loans,” said U Myo Min Aung, the head of a farmers’ union in Minbya Township.

Not only houses but also paddy seeds and cattle used in farming were destroyed by Cyclone Mocha that hit Arakan State on May 14.

In early August, around 50,000 acres of paddy fields were flooded to the point of requiring replanting, but farmers have struggled to find the funds to do so.