JUNE 26, 2023 – The largest microfinance provider in Myanmar announced its closure this week after forgiving more than $156 million of the outstanding debts of 890,000 borrowers and setting aside money to repay creditors, saying government demands to hand over assets and new regulations make it impossible to work in the country.
PGMF, which has made small loans to mostly women villagers for more than a quarter century, said it will cease operating in Myanmar after June 30, a deadline imposed by the government for the organization to comply with new regulations demanded by the government. “We have sadly concluded that we can no longer operate in the country despite working diligently over the last two years to persuade the government in Myanmar to allow the organization to continue serving hundreds of thousands of borrowers and savers,” said Ellen Varney, Chair of the Board for PGMF. “By denying us the ability to register, the government has forced us to either leave or to operate illegally.”
The government refused to give its approval for PGMF to register as a commercial entity which could continue to provide microfinance loans unless PGMF agreed to share the organization’s profits and agreed that all its assets go to the government in the future. This was impossible to comply with for many reasons, including that it could be in breach of U.S. sanctions law.
PGMF’s future was further threatened last year when the government banned new loans to any clients. Visas were denied for the organization’s senior leadership. Strict foreign exchange controls effectively block external transactions, including interest payments to PGMF creditors, without prior approval, and microfinance organizations are not allowed to make principal payments on any foreign debt. PGMF has set aside money to repay its creditors and it is now up to the Myanmar authorities to approve those repayments.
The Myanmar Registration Law, enacted last year, imposes criminal penalties, including imprisonment, on nongovernmental organizations for not complying with its registration rules. It forbids nongovernmental organizations, such as PGMF, from offering microfinance in Myanmar.
“Our priority under these challenging circumstances is to do what we can for our borrowers by ensuring that PGMF’s assets go to them, the people of Myanmar,” said Fahmid Bhuiya, President & Chief Operating Officer of PGMF. “On behalf of the leadership, we want to thank our clients, partners, lenders, and hard-working PGMF family of employees for their support. We stand ready to reenter the space when conditions permit.”
In recognition of the hard work and dedication of the organization’s staff, management has pre-paid salary and benefits and a bonus to its approximately 4,400 employees. It has also met all its obligations and paid for any accrued leave not taken and for any benefits owed.
PGMF has served nearly 15,000 villages and 2.3 million clients over its 25 years of service to the people of Myanmar, 99 percent of whom are women, reaching nearly 1 in 10 households in Myanmar. It has been instrumental in building the microfinance industry that exists in Myanmar today and its largely female client base has meant it has contributed to gender equality as well as reducing poverty in the country.
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About PGMF
PGMF is Myanmar’s largest microfinance institution. PGMF aims to increase family income and achieve better living conditions through a sustainable credit service, fulfilling capital requirements of economically poor households. The organization is a nonprofit registered in Delaware. It is governed by the PGMF Board, separate from Pact Inc.
PGMF 