The World Bank announced Wednesday it is prepared to resume assistance to Myanmar after 25 years. It said it is ready to provide $85 million in grants for development while also helping to clear almost $400 million in arrears from old loans.

World Bank Vice President for East Asia and 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.

Ms. Cox and a colleague from the affiliated International Finance Corp. met with Myanamar 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 Ms. 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.

Mr. Thein Sein’s reform programme 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.

Ms. Cox said she did not expect the issue of arrears to slow action on the grant. She stressed that the bank is not forgiving the debt. In April, Japan said it would take steps to forgive about 300 billion yen ($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.

The World Bank said the grants would be for “community-driven development programmes which will allow communities to decide whether to invest in schools, roads, water or other projects.”

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