Buddhist monks and a couple walk past each other near a container yard in Rangoon.Soe Zeya Tun/Reuters
The World Bank on Wednesday pledged $85-million (U.S.) in development grants to Myanmar and assistance for the former pariah state to clear its arrears as part of efforts to support political reforms.
The announcement came as the World Bank and the Manila-based Asian Development Bank both opened offices in the impoverished country, which is emerging from decades of military rule under a new reformist government.
"We are committed to eradicating poverty and the new office opening in Myanmar will allow us to reach some of the poorest people in East Asia," World Bank president Jim Yong Kim said in a statement.
"They have been cut off from the global economy for too long and it's very important that they receive real benefits from the government's reforms."
The World Bank froze its Rangoon program in 1987 after the country, then known as Burma, stopped making payments on its debt to the bank.
A hurdle for the resumption of aid had been how to deal with the unpaid money, including arrears of almost $400-million owed to the World Bank.
But the issue has been resolved and Myanmar will receive a bridging loan to help it to clear the arrears, a senior official at the Washington-based multilateral lender told a news conference in Rangoon.
"We are not forgiving the debt. We are just clearing the back interest payments. Then they'll start repaying it again," said Pamela Cox, the World Bank's vice president for East Asia and the Pacific.
The new grants will go towards schemes that will allow communities to decide whether to invest in schools, roads, water or other projects, she said.
Myanmar also owes about $500-million to the Asian Development Bank, which is also returning to the country for the first time since 1988.
"We have been discussing with the government how to clear arrears. I think we are coming to a resolution. Once this arrangement is done, then we can start our operation," Kunio Senga, ADB Southeast Asia director general, told AFP.
Myanmar President Thein Sein has overseen a series of dramatic reforms since taking office last year, including the release of political prisoners and the election of Nobel Peace Prize winner Aung San Suu Kyi to parliament.