Debt in the context of crisis: The evolution of lending in Myanmar
Key Highlights
– Household indebtedness has declined substantially. Between 2021 and 2025, the share of households in debt in rural areas fell by 21 percentage points and in urban areas by 9 percentage points. This decline is partly due to credit markets no longer functioning, particularly in conflict-affected areas.
– Informal lenders dominate Myanmar’s credit market. In 2024–2025, 80 percent of loans originated from informal sources, while only 21 percent came from formal financial institutions or the public sector.
– Relatives and friends are the largest source of credit, accounting for 53 percent of all loans, followed by moneylenders with 20 percent. Private banks account for only 1 percent of loans.
– Most loans are used to meet basic household needs, with 43 percent used for food purchases and 27 percent used for health expenditures.
– Debt is concentrated among vulnerable households, including the asset poor, wage laborers, households with larger family sizes and higher dependency ratios, and those affected by economic and climate shocks.
– Loan repayment difficulties are widespread and are associated with poorer welfare outcomes, including reduced spending on food and healthcare, higher income poverty, lower food consumption, and poorer dietary diversity.
Since the 2021 military coup, households in Myanmar have faced overlapping economic, climatic, and conflict-related shocks that have severely disrupted livelihoods and increased financial vulnerability. In this context, borrowing becomes an increasingly important coping strategy for households seeking to smooth consumption, manage shocks, and maintain basic welfare. But despite its importance, formal and informal sources of debt have shrunk, forcing many to go without debt. Using data from the Myanmar Household Welfare Survey (MHWS), this paper examines patterns of household indebtedness, sources and uses of loans, repayment difficulties, and the relationship between debt and household welfare outcomes.
In the first round of the MHWS (December 2021–February 2022), 61 percent of households were in debt, including 67 percent of rural households and 48 percent of urban households. Since then, the share of households owing money has fallen by 21 percentage points in rural and farm households and by 9 percentage points in urban households, suggesting growing supply-side constraints in lending.
Eighty percent of loans are from informal lenders, with only 21 percent sourced from formal financial institutions or the public sector. Informality is considerably higher in urban areas, where 89 percent of households had informal loans, compared with rural areas, where 76 percent of households had informal loans. This difference appears to be driven primarily by farmers, who are still able to access some government and formal lending for agriculture.
Overall, most debt is held by relatives and friends (53 percent in 2024-2025). This is followed by money lenders (20 percent). Shops and traders are also important sources of credit (8 percent), particularly for wage laborers. Again, farmers appear to retain some access to public sector loans (10 percent). MFIs represent the second largest source of formal lending (9 percent). Finally, private banks make up a very small share of loans in the country (1 percent).
Authors
van Asselt, Joanna; Aung, Zin Wai; Oo, Theingi; Synt, Nang Lun Kham; Ei Win, Hnin
Citation
van Asselt, Joanna; Aung, Zin Wai; Oo, Theingi; Synt, Nang Lun Kham; and Ei Win, Hnin. 2026. Debt in the context of crisis: The evolution of lending in Myanmar. Myanmar SSP Working Paper 83. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/185294
Keywords
Asia; South-eastern Asia; Debt; Lending; Credit; Informal Economy; Vulnerability
