The largest microfinance company in Myanmar, Pact Global Microfinance Fund (PGMF), is withdrawing from Myanmar due to pressure from the junta and has forgiven all the outstanding debts in the country.

PGMF announced that restrictions put in place by the junta had made it impossible for the company to operate in the country. As part of its withdrawal PGMF has forgiven, and will not collect, over $156 million USD in outstanding debts, all the debts owed by its 890,000 borrowers in Myanmar.

PGMF started operating with the support of the United Nations Development Plan (UNDP) in Myanmar in 1997, making loans to low-income households and people who were unable to obtain finance elsewhere, especially women and people in rural areas. It has given out loans to 2.3 million clients in nearly 15,000 villages in Myanmar.

But, the junta made it impossible for PGMF to operate in Myanmar in various ways.

The 2022 Myanmar registration Law banned unregistered non-governmental organisations (NGOs), such as PGMF, from offering microfinance loans. But, the junta refused to let PGMF register as a commercial entity, which would have allowed it to continue offering microfinance loans.

Senior staff at the company were also denied visas and the tightening up of foreign exchange rules also further limited PGMF’s operations.

In recent months the junta told PGMF that it could continue to operate in Myanmar if it agreed to hand over a part of its profits and all of its assets to the junta, something PGMF said it could not even consider as it would breach US sanctions law.

PGMF explained that shutting its business in Myanmar was a last resort, but that under the current conditions, it had no other options. This also meant that PGMF will have to make all its 4,000 staff in Myanmar redundant.

PGMF Board Chair Ellen Varney said: “In addition to our borrowers and creditors, our priority now is our staff. The closure of PGMF is of great sadness for us as an employer. In recognition of the hard work and dedication of the organisation’s staff, management has pre-paid salary and benefits, as well as a bonus, to all the PGMF family across Myanmar. It has also honored its obligation to pay for any accrued leave not taken and for any benefits owed.”

An official PGMF statement also said that all loans in Myanmar will be written off as of 26 June and that following the statement no one need pay back any more money that they owe.