Japan said on Saturday it will forgive about 300 billion yen ($3.7 billion) of Myanmar's debt and resume development aid as a way to support the country's democratic and economic reforms.

The government made the announcement after a meeting between Prime Minister Yoshihiko Noda and Myanmar President Thein Sein following a summit with leaders from the five nations of the Mekong River region.

Myanmar's military junta last year handed power to a nominally civilian government that has surprised the world with a series of sweeping political and economic reforms, including releasing prominent political prisoners and allowing democracy icon Aung San Suu Kyi to contest recent parliamentary by-elections.

The Japanese government said in a statement that it will cancel 127.4 billion yen in loans due after April 2003. It will also forgive 176.1 billion yen in overdue charges accumulated over the past two decades after one year's time as the two countries jointly monitor reforms. Japan does not have sanctions on Myanmar.

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