The United States eased financial restrictions to allow US-based non-governmental groups to operate in Myanmar, putting into place an incentive to encourage democratic reforms.
The Treasury Department said that it would no longer bar financial transactions in the country formerly known as Burma if the money is going toward projects that "meet basic human needs" or promote democracy.
Such projects include assistance to internally displaced people, English-language schools as well as delivery of clothes, food and medicine. The move also lets US missionaries spend money in the heavily Buddhist nation.
The actions were in line with an April 4 announcement by Secretary of State Hillary Clinton, who sought to reward reformers who permitted by-elections swept by the long-repressed opposition.
In a statement Tuesday to celebrate Myanmar's Thingyan new year, Clinton said that the once isolated country "has taken important steps on an historic new path toward democracy and economic development."
"As you build a brighter future filled with new opportunities, the United States will continue to work with you to strengthen mutual understanding and trust between our two countries and peoples," she said.
The April 1 by-elections saw Aung San Suu Kyi, the Nobel Peace Prize-winning democracy activist who had spent most of the past two decades under house arrest, win a seat in the military-dominated parliament.
The order issued by the US Treasury Department's Office of Foreign Assets Control made clear that restrictions would remain in place against individuals in Myanmar seen as responsible for repressing democracy or violating human rights.
President Barack Obama's administration has promised to offer step-by-step incentives to Myanmar as President Thein Sein carries out reforms that few would have considered possible a little more than a year ago.
State Department spokesman Mark Toner said that the United States was also moving ahead to implement the other steps announced earlier this month by Clinton.
Clinton, who paid a landmark visit to Myanmar in December, promised on April 4 to quickly appoint an ambassador to the country to restore full diplomatic relations for the first time in more than two decades.
Clinton also pledged a wider lifting of financial restrictions on Myanmar that could allow US investment in select areas and potentially bring credit cards into the country, one of the few where MasterCard, Visa and American Express are never accepted.
Aung Din, a former political prisoner who heads the US Campaign for Burma advocacy group, said he supported Tuesday's action on non-governmental groups but was concerned about a larger easing of sanctions.
Easing the ban on financial services "may allow the cronies and the military to be able to use US dollars in their transactions," he said.
Noting that Suu Kyi's National League for Democracy will have only a sliver of seats in parliament, Aung Din said the United States needed to use sanctions carefully to ensure that national elections slated for 2015 are truly free and competitive.
US officials have said that they are refocusing sanctions to target institutions such as the military, seen in Washington as one of the biggest impediments to reform due to participation in abuses and ethnic conflict.
Other Western powers are also revising restrictions on Myanmar. EU foreign policy chief Catherine Ashton said Tuesday that the 27-nation bloc will further ease sanctions this month and that she would visit Myanmar from April 28 to 30.
Australia said Monday that it will lift travel and other restrictions against President Thein Sein and more than 200 other people in Myanmar.
In the United States, the removal of most sanctions would require approval by Congress.