Burma: World Bank preparing $85m aid to boost reforms

People search for usable items at a junkyard in Yangon, Burma May 16 2012 Lifting people out of poverty has been cited as key to Burma's economic growth

The World Bank has said it is considering restarting aid to Burma for the first time in 25 years.

The bank said it was preparing up to $85m (£54m) in grants for community driven development programmes.

It said the funds can be used to develop infrastructure, schools or other projects.

Burma has introduced political and financial reforms recently, prompting various countries to lift their sanctions against it.

The World Bank said the grants were "intended to build confidence in the reform process".

"We are committed to eradicating poverty," Jim Yong Kim, World Bank group president, 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."

Further help

The bank said that it would also help to restructure the payment of Burma's current arrears of $397m.

Analysis

Having failed to make any payments for more than 25 years, Burma ran up a debt of $397m at the World Bank.

With political reforms came the easing of sanctions and now discussions are progressing rapidly over new and better terms for repaying that debt.

If all goes well, that could mean much-needed new interest-free loans to Burma being issued from the start of 2013.

Once that amount has been cleared, Burma will also be given access to interest-free loans from the International Development Association, the World Bank's fund for the poorest countries.

The bank, which has opened up an office in Burma, said that it would also provide assistance to Burmese authorities, so that the country could further reform its financial system and improve the business environment.

"Actions in these areas will help the government attract responsible foreign investment, expand trade, manage its resources better and create more jobs and opportunities for people," said Pamela Cox, vice-president for East Asia and the Pacific.

Meanwhile, the International Finance Corporation, a member of the World Bank that focuses on private sector development, said it had started conducting an assessment to see which areas of the economy needed further support.

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Burma's Transition

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