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MYANMAR: Cyclone survivors struggle with debt burden

03 Jul 2009 12:42:40 GMT
Source: IRIN

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OUTKWIN, 3 July 2009 (IRIN) - A year ago, Soe Soe was US$20 in debt. Like many survivors of Nargis who lost their homes, she had no choice but to borrow from money lenders to feed her family - often at extortionate interest rates.

But more than a year after the category four storm struck southern Myanmar - leaving close to 140,000 people dead and affecting more than two million - she says she is drowning in debt.

"For me it's one disaster after another," the 29-year-old told IRIN from her makeshift hut in Outkwin Village in Pyapon Township, in the heart of Myanmar's Ayeyarwady Delta and one of the hardest-hit areas.

She now owes about $200 and at an interest rate of 40 percent every two weeks, she is unlikely to be able to repay it.

Debt levels were already high before Nargis, according to the UN, but since then they have soared and credit is now harder to find. People are increasingly worried that they will not be able feed themselves, much less restore their livelihoods alone - pushing them increasingly into the hands of money lenders, who are thriving.

According to one interviewed by IRIN, interest rates are about 10-20 percent a month with some collateral, while others charge as much as 40 percent for a two-week period if there is a greater risk of default.

"We know our interest rates are higher than in previous years, but it's quite risky for us," one money lender in Outkwin said. "We can lose our money any time if they don't pay back."

Others maintain that the higher the interest rate, the more likely they will get their money back.

"I even had to leave a longyi [a sarong-like garment worn by men and women] as collateral," said one mother of two.

Food debt

According to a Rapid Food Security Assessment conducted by the World Food Programme (WFP) earlier this year, 83 percent of households surveyed were reportedly in debt – with food the dominant expense.

The survey showed that 51 percent of sampled households in the Labutta and Bogale townships relied on food aid for rice supplies, while only 25 percent reported a recovery in their livelihoods.

"Recovery will require several more years of support and input," Chris Kaye, country director for WFP in Myanmar, told IRIN earlier.

That being the case, many survivors feel they have no choice but to accept higher interest rates, knowing they will face even tougher times ahead.

Aye Lwin, 41, from Phoshangyi Village, Dedaye Township, says her family of nine can barely afford one meal a day since they cannot borrow any more money.

"Is there anyone who will rescue us from this debt trap?" the mother-of-seven asked.

Last year she borrowed nearly $500 at 15 percent a month to buy fishing equipment, but this year's catch has proven much smaller than in previous years and she can longer keep up with the payments.

lm/ds/mw

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