The World Bank said Tuesday that it was encouraged by Myanmar's new openness and wanted to support economic reforms but cautioned that the long-isolated state had to pay back arrears. The Washington-based financial institution said that it hoped to work with Myanmar to improve public services, upgrade the antiquated financial and banking sectors and create opportunities for the private sector. "We are encouraged by developments in Myanmar and we have begun the process of re-engaging with the government to support reforms that will benefit all of the people of Myanmar, including the poor and vulnerable," said Pamela Cox, the World Bank's vice president for East Asia and the Pacific. The World Bank said it also hoped to work with civil society in the country formerly known as Burma and to support the emerging peace process in regions that have been torn for years by ethnic fighting. But the World Bank stopped short at offering immediate financial support, saying that Myanmar must first make arrangements to pay off its debts to international financial institutions. The World Bank's regulations state that it cannot provide funding to any country in arrears. In 2008, then managing director Juan Jose Daboub said that the bank could not lend to Myanmar after devastating Cyclone Nargis as the regime had been in arrears since 1998. The World Bank did not immediately have a current figure on Myanmar's debt. The country, once known as the "rice bowl of Asia" for its agricultural riches, is deeply impoverished after years of economic mismanagement. Myanmar has a convoluted currency system, with an informal rate almost 100 times better than the official one, and experts find much of its official data to be unreliable. But Myanmar has surprised many observers with political reforms. Since a civilian government took over last year, authorities have initiated dialogue with the opposition and ethnic minorities and freed political prisoners. Myanmar's government has also pinned hopes on economic reforms. In January, it said that it planned to offer eight-year tax exemptions to foreign investors in a country known for its gem industry. The country remains under Western sanctions, but the United States has ended opposition to international financial institutions' dealings with Myanmar. Washington has voiced willingness to take further steps in return for more progress.