This paper examines patterns of household indebtedness in this environment — looking at who is borrowing, from whom, for what purposes, and with what consequences for household welfare.
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- 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).
Most loans are used for household expenditure rather than for investment. Between 2023 and 2025, 43 percent of loans nationally were used to purchase food. Health expenditures were the second most common use, accounting for 27 percent of loans, while around 7 percent of loans were used for education and 6 percent for ceremonies, donations, or repaying other loans. In rural areas, 33 percent of loans were invested in farming and 13 percent in businesses, whereas in urban areas only 4 percent were invested in farming but 22 percent in businesses.
Debt is concentrated among more vulnerable households: the asset poor, farm and non-farm wage labor, landless households and households with larger family sizes and higher dependency ratios are all more likely to borrow. Exposure to shocks is strongly associated with indebtedness. Households affected by climate shocks, food price increases, loss of employment, fuel price increases, and electricity blackouts are all more likely to owe money. On the other hand, conflict shocks are associated with lower levels of borrowing, likely reflecting reduced access to credit in conflict-affected areas rather than lower borrowing needs.
In 2024-2025, 30 percent of households reported that it would be very difficult to repay their loans, while a further 44 percent reported that repayment would be somewhat difficult. The households most likely to struggle with repayment are also among the most vulnerable, including farm and nonfarm wage workers, asset-poor and landless households, households with many dependents, and those affected by climate and conflict shocks. Farmers and rural households, however, report relatively lower repayment difficulties, likely reflecting continued ability to use farm-based income sources to repay loans. Loan sources also matter for repayment difficulty. Compared with borrowing from relatives and friends, households borrowing from shops and traders, banks, and the public sector were less likely to report repayment difficulties. In contrast, borrowing from money lenders substantially increased the likelihood that a loan would be difficult to repay. Finally, repayment difficulties are closely associated with declining welfare. Households struggling to repay loans are more likely to reduce spending on food, non-food items, and healthcare, and are more likely to experience income poverty, low food consumption, and poor dietary diversity.
In the context of repeated economic and conflict-related shocks in Myanmar, access to credit remains critical for household survival. However, high interest rates, the predominance of informal lending, and the low incomes of borrowers mean that debt can quickly become unsustainable, trapping vulnerable households in cycles of indebtedness that further erode welfare. Expanding access to affordable credit, introducing more flexible shock-responsive repayment mechanisms, and linking lending to employment and livelihood support programs will be critical for helping vulnerable households cope with the ongoing crisis.