The money is for infrastructure projects in villages in poor rural areas, the bank said in a statement Friday after its board of directors in Washington approved a new strategy for helping the country formerly known as Burma.
“I am heartened by the reforms that have been taking place in Myanmar and encourage the government to continue to push forward their efforts,” said World Bank president Jim Yong Kim.
The focus will be on the “most urgent development needs” he added, citing education, health, infrastructure and the private sector to boost job creation.
The World Bank closed its Yangon office in 1987 and ceased new lending after the then-ruling junta stopped making payments on debts worth hundreds of millions of dollars left from previous programmes.
A hurdle for the resumption of aid has been how to deal with the unpaid money, including arrears of almost $400 million owed to the World Bank.
The Bank, which opened a new office in Yangon in August, said Friday that it was working with Japan and the Asian Development Bank to resolve the issue and expected to clear the arrears in early 2013.
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.
In response, the West has begun rolling back sanctions and foreign firms are lining up to invest in the country, eyeing its huge natural resources, large population and strategic location between China and India.
Japan agreed in April to forgive $3.8 billion of Myanmar’s bilateral debt, as donors rally to help the nation’s battered economy.
Myanmar also owes roughly $500 million to the Asian Development Bank, which is returning to the country for the first time since 1988.