YANGON, Myanmar — The World Bank announced Wednesday it is prepared to resume assistance to Myanmar after 25 years, saying it is ready to provide $85 million in grants for development while also helping to clear almost $400 million in arrears from old loans.
The World Bank's vice president for East Asia and the Pacific, Pamela Cox, announced the grants in Yangon as she opened a new World Bank Group office. She said they could begin by October if the bank's board approves.
The Asian Development Bank also opened an office in Myanmar on Wednesday.
Ms. Cox and a colleague from the affiliated International Finance Corp. met with President Thein Sein and opposition leader Aung San Suu Kyi this week. It was the first visit by senior bank officials since the country began undertaking political and economic reforms last year after decades of repressive military rule.
Myanmar's military junta handed power last year to a nominally civilian government that has surprised the world with a series of political and economic reforms, including releasing prominent political prisoners and allowing Mrs. Suu Kyi to contest recent parliamentary by-elections.
"This comes at a critical time when the country is undergoing what we call a triple transition: Myanmar's moving from a military government to a more open and democratic government, Myanmar is moving from conflict to peace, and Myanmar is moving from a closed economy to an open economy," Ms. Cox told a news conference in Yangon.
The World Bank said the grants would be for "community-driven development programs that will allow communities to decide whether to invest in schools, roads, water or other projects."
Thein Sein's reform program has prompted Western nations to lift or ease sanctions they had applied to the previous military government because of its repressive policies.
However, several hurdles remain to more substantial World Bank assistance.
In February, the United States, the bank's largest shareholder, lifted its opposition to multilateral development banks giving limited technical assistance to Myanmar, but other U.S. sanctions still require Washington to oppose new lending, though they could be lifted sometime in the future.
Ms. Cox said she did not expect the issue of arrears to slow action on the grants. She said clearing the $397 million in arrears -- which would be done through a loan covering interest that has not been paid since 1997-- would not be accomplished until January, but if the board agrees the grants could be given before then.
She stressed that the bank is not forgiving the debt.
In April, Japan said it would take steps to forgive about $3.7 billion of debt and resume full-fledged development aid to Myanmar as a way of supporting the country's democratic and economic reforms.
Japan's Kyodo News agency reported Wednesday that the Japanese government will extend bridge loans to Myanmar to cover the arrears owed to the World Bank, as well as about $500 million owed to the Asian Development Bank. The report did not name a source for the information.