The World Bank launched a rural community development fund on Monday aiming to provide farmers in 12 poverty- stricken villages with essential low-cost loans.

The fund, worth US$1.33 million, has been launched as a three-year pilot program for poor villages in Henan and Sichuan Provinces, said Zhang Chunlin, a project manager with the World Bank, adding that the British government contributed US$350,800 to the program.

Impoverished farmers have seen that the country's banking reforms, involving the closure of many local branches, make it difficult for them to obtain bank loans, said Liu Fangyu, an official with the Ministry of Finance.

Meanwhile, China's poverty alleviation funds are mainly used to build new infrastructure, leaving few funds to support farm production, said Liu.

The World Bank program will help villagers manage their own resources and their community affairs, said Liu Shuwen, an official with the State Council Leading Group Office of Poverty Alleviation and Development.

The application for the program, made by the Chinese government, was approved by the World Bank in November.

(Xinhua News Agency December 5, 2006)