The kyat lost value again this week after the regime-backed parliament on Wednesday approved borrowing of up to 2.1 trillion kyats (approximately US$1 billion at the fixed official rate) for a junta struggling with ballooning defense costs.
The kyat has weakened drastically since the 2021 coup plunged Myanmar into a dollar crisis, with economic sanctions, the withdrawal of foreign investment, declining exports and fighting in border trade zones taking a toll on the regime’s coffers.
On Wednesday, the rubber-stamp parliament approved the regime’s proposal to “borrow” up to 2.1 trillion kyats from the Central Bank of Myanmar to fill its budget deficit for fiscal year 2026-27. The legislature has already approved the regime’s plan to borrow money from major arms supplier Belarus, which will be used to import goods from Minsk.
Prior to Wednesday’s parliamentary approval, the regime had already raised nearly 14 trillion kyats through multiple treasury bill and bond auctions to finance its budget deficit for fiscal year 2026–27, according to Central Bank Deputy Governor Thet Htun Aung. He admitted the regime had also relied on treasury bond issuances and borrowing from the Central Bank to address budget shortfalls in previous years.
Analysts warn that borrowing from the Central Bank will accelerate inflation and the kyat’s depreciation. Currency traders report the dollar rose to 4,670 kyats in the unofficial market on Thursday, up from 4,450 kyats earlier this month, while the baht has risen from 129 to 139 kyats. Before the coup, the kyat was trading at less than 1,300 to the dollar.
“This surge is linked to the new loans. The market jumped from 4,400 to nearly 4,700 within days. Whether it will continue to increase, or decline—or if the regime will make arrests—remains to be seen,” one trader told The Irrawaddy. The regime has repeatedly arrested foreign exchange traders during currency spikes, accusing them of speculation and market manipulation.
The loan proposal has triggered fears that the revenue-deprived regime will simply print more banknotes to address the shortfall.
Deputy Finance and Revenue Minister Kyaw Htin explained that the regime has other plans to address the shortfall, apart from borrowing money. “We are working to reduce reliance on Central Bank financing to boost state revenue. We are developing taxation policies,” he told the parliament.
Recently, the regime has escalated its efforts to enforce remittance rules requiring Myanmar migrant workers to send at least 25 percent of their salaries back home at the official exchange rate of 2,100 kyats per dollar.
Officially, the Central Bank pegs the dollar at 2,100 kyats, while the trading rate between banks is 3,660 kyats and the market rate currently hovers at around 4,670 kyats. Meanwhile, the regime has restricted imports to reduce dollar spending, which has proved counterproductive for a war-ravaged economy heavily reliant on imports ranging from cooking oil and pharmaceuticals to fuel and fertilizer.
Rising dollar rates are expected to push up the cost of imported fuel, medicines, food, consumer goods and machinery, with knock-on effects for transport and production costs. Domestic industries face mounting pressure as expenses rise.
Meanwhile, the Belarus loan package, arranged through the Development Bank of the Republic of Belarus (DBRB) and Belinvestbank JSC, carries interest rates of between 2.25 and 9.33 percent. The loans will be used to import goods including capital goods from Minsk, but the total amount was not revealed.
Myanmar can receive loans in five currencies—the dollar, euro, Russian ruble, Belarusian ruble and Chinese yuan—said Kyaw Htin, who admitted exchange rate fluctuations would affect the amount of money Myanmar will actually receive.
Unlike concessional loans from Japan’s aid agency JICA—which carry a 40‑year repayment term at just 0.01 percent interest—analysts note that the Belarusian loan is a “tied” arrangement, warning the regime is locking itself into costly debt that will further deepen Myanmar’s economic crisis.
International organizations and Japan suspended development aid to Myanmar following the coup.