Myanmar’s parallel finance minister warns it will not honour junta debts

Myanmar’s interim national unity government has cautioned foreign banks against lending to General Min Aung Hlaing’s junta, saying it will not recognise the debt once it regains power. 

The warning was delivered by the finance minister of the parallel government formed by supporters of Aung San Suu Kyi, the country’s toppled leader. He said financial institutions should follow foreign investors in boycotting the military regime.

“The NUG government will not recognise any domestic or international debt raised by the junta,” Tin Tun Naing told the Financial Times in a video interview from inside Myanmar.

“If the military get in a credit crunch and if they take on loans from some willing lender, when the NUG comes into power, that debt will not be honoured.”

Tin Tun Naing also said that the parallel government was seeking to take control of $1bn of Myanmar government funds held in the US that Washington froze after the military seized power. 

“If we are able to access the $1bn, if it is unfrozen, that would make a huge difference in humanitarian assistance and in trying to rebuild the lives and livelihoods of our people,” Tin Tun Naing said.

However, he acknowledged that this was a “legally complicated area” and part of an “ongoing dialogue” with US officials. 

The NUG was formed in April by MPs from Suu Kyi’s National League for Democracy, which was forced from power in February’s coup, along with ethnic minority and other anti-coup figures in hiding or in exile. 

The junta has branded both the NUG and its recently announced “people’s defence force” as terrorist groups. It has issued arrest warrants for NUG ministers. 

No foreign government has formally recognised the parallel government. However, MPs and officials from several countries have engaged with its representatives as they seek a resolution to Myanmar’s deepening political and economic crisis.

More than three months after the coup, the junta has killed 785 people and arrested almost 5,000, according to the Assistance Association for Political Prisoners. Despite the crackdown, a civil disobedience movement continues to stage protests and strikes aimed at weakening the junta and crippling banking and business.

“They underestimated the people,” Tin Tun Naing told the FT. “They did not expect the people to reject them so strongly.” 

He said that the military regime was “experiencing liquidity problems already” and had deferred quarterly pensions payments, as well as benefits for the elderly and disabled. 

The regime’s opponents and international human rights groups want international businesses to deprive the junta of all revenues to force them from power.

They have succeeded in pressuring foreign investors, including Japan’s Kirin and South Korea’s Posco, to withdraw from joint ventures with military-controlled conglomerates.

The NUG also wants oil and gas and telecom companies to withhold tax, licence and other payments to the military government by placing them in escrow. The companies have pointed out that doing so would put their local staff at risk of prosecution and jeopardise their services. 

“The NUG is pro-business and has no intention of disrupting the business of these companies,” Tin Tun Naing said. “I am not asking for their operations to cease.” 

However, he rejected the notion that the companies would face legal repercussions for holding their payments to the regime in escrow. “The military will think twice about doing that to a powerful multinational with a powerful government behind it,” he said.

Follow John Reed on Twitter: @JohnReedwrites