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

The fund, worth US$1.33 million, was launched as a three-year pilot program in poor villages in central China's Henan province and southwestern Sichuan province, said Zhang Chunlin, a project manager with the World Bank.

The British government contributed US$350,800 to the program, he said.

Impoverished farmers have found that the country's banking reforms, which involved closing many local branches, made it difficult for them to get 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 dollars to support farm production, said Liu.

The World Bank program will help villagers manage their own resources and the affairs in their own communities, 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)