Cash shortages worsen in Arakan as fighting intensifies

By Admin 11 Jul 2024

DMG Newsroom
11 July 2024, Sittwe

With the banking system crippled by escalating hostilities in Arakan State, the service charges that people must provide to Wave Pay and KBZ Pay agents to withdraw cash from their mobile wallets has increased significantly amid severe cash shortages.

Before the fighting, the service fee was just 500 kyats to withdraw 100,000 kyats. However, residents now have to pay 10,000 kyat to 13,000 kyat, or 10 to 13 percent of their withdrawal.

“Cash is running short. Even if we are willing to pay more than 10 percent, we can’t withdraw as much as we want. If it goes on like this, the crisis will only deepen,” said a Mrauk-U resident.

The banking system has effectively collapsed in Arakan State due to fighting between Myanmar’s military regime and the Arakkha Army (AA), and residents must rely on mobile banking to transfer and withdraw cash. Junta monetary restrictions are also contributing to cash shortages.

One mobile money agent from Kyauktaw said: “We have to buy cash at a high percentage to keep our business operational. As the cash flow has stopped, it has become very difficult to obtain cash.”

The shortages are so severe that mobile money agents are no longer charging customers who seek cash-in service, and instead they return 7 percent of the amount of money that is transferred, he added. “For example, if a customer wants to transfer 100,000 kyat in cash for transfer, he only gives me 93,000 kyat in cash,” he explained.

The United League of Arakan (ULA) has told residents to use worn banknotes as the banking system has ceased operation in areas controlled by the AA.

Some banks remain open in townships controlled by the regime, but they are also facing cash shortages, and locals depend on mobile money agents for their financial needs.

“We can’t withdraw as much as we want either from KBZ Pay or Wave Pay. Agents only give a maximum of 500,000 kyats per customer. Some agents only give 200,000 kyats,” said a resident of Kyeintali in Gwa Township.

The regime has applied a “four cuts” strategy designed to cut off food sources, funds, information and recruits since renewed fighting erupted in Arakan State in November 2023, taking a serious toll on the socio-economic lives of locals.