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Japanese Debt Relief Grants

Dear Friends, Colleagues and BurmaNet subscribers:

     In my research on Burma-Japan relations, I have found that Tokyo
has given more than yen 30.0 billion in DEBT RELIEF GRANTS during
1990-1994, with more such grants awarded after that time. In principle,
these grants are given to financially-troubled ODA recipient countries
following United Nations guidelines. Debt serviced by the country (that
is, interest and principal paid off) is converted by the Japanese
government into grants which are then given back to the debtor country.
     What makes this interesting is WHICH EXCHANGE RATE is used when
servicing the debt. If the Official Rate of US$1.00=kyats 6.3 is used in
paying off the debt, SLORC/SPDC is obviously making a killing, as shown
in the hypothetical example below:

   1: SPDC pays 6.3 million kyats which is calculated at the official
      yielding US$1.0 million or yen 119 million at US$1.00=119 yen.

   2: But the free market rate is US$1.00=330 kyats (or more). That
means that
      6.3 million kyats is really worth only US$19,090, or yen

   3: Which means that SPDC is paying only US$19,090/yen 2.3 million to
      a hard currency debt relief grant of US$1.0 million or 119 million
      which turns out to be a sum 52 (fifty-two) times the original
      paid off! Talk about Creative Accounting!

     Can anyone confirm that when debt is serviced by SPDC, the official
exchange rate is used? If so, then a much larger amount of financial aid
has been flowing from Tokyo to Rangoon since 1990 than had previously
been calculated.


     Donald M. Seekins
     Meio University