An EU official arrived in Myanmar's capital Monday for talks with a civilian government praised by Brussels for the reforms it has begun over the past year after five decades of authoritarian military rule.

European Commissioner for Development Andris Piebalgs, who will be the most senior EU representative to meet President Thein Sein, will announce a 150 million euro ($198 million), two-year aid package to help Myanmar reverse decades of stagnation due to international isolation and military rule.

The momentum of change ... is impressive and the EU recognizes the need to do all it can to support the country at this time, Piebalgs said at the start of his three-day visit.

More dialogue will help better policies to emerge; more money for development cooperation will promote economic and social development and help reduce poverty.

Western sanctions imposed on the former military regime are still in place but are being reassessed as a result of reforms by the civilian rulers who took office 11 months ago.

The EU is leading the way in trying to support a country vastly underdeveloped in terms of infrastructure, health and education. To illustrate the stepped-up commitment, its new aid package is worth almost as much as the 173 million euros it has given the Southeast Asian country since 1996.

EU aid is primarily focused on health and education, but the new package also aims to provide resources for people displaced by ethnic conflicts and for agriculture, which provides a living for many of the country's estimated 60 million people.

Last month, the bloc eased sanctions slightly when its Foreign Affairs Council agreed to temporarily lift travel bans on Thein Sein and top government officials in response to cease-fire deals with ethnic rebels and a fourth prisoner amnesty on January 13, when about 300 political detainees were freed.

Some diplomats from EU member states believe the bloc will lift more as the year goes on, moving earlier than the United States, which is also positive about the changes under way but has a stricter sanctions regime that could take longer to undo.

The EU's annual sanctions review will take place in April and all eyes will be on April 1 by-elections that will mark the political return of Aung San Suu Kyi and her National League for Democracy (NLD) party after boycotts of the 2010 election and a 14-year constitution-drafting process.

Western businesses constrained by the sanctions are quietly showing interest in Myanmar for its natural resources -- oil, gas, timber and gemstones -- and are also looking to invest in tourism, financial services, hotels, telecommunications networks and infrastructure.

Piebalgs will meet the president and six ministers in Naypyitaw Monday and will visit Suu Kyi at her home in the former capital, Yangon, Tuesday.

The by-elections for 48 legislative seats are expected to go smoothly. The government, which is anxious to have sanctions scrapped, pulled out all the stops to allow Suu Kyi to run, hoping that will legitimise a parliament that, while more vocal than expected, has only limited powers.

The release of prisoners and, if it ends up being the case, free elections in April, will be used as motivation for the EU to prove that engagement 'works', said Joakim Kreutz, a researcher at Sweden's Uppsala University and an expert on Myanmar sanctions.

I still expect the arms embargo and some personal sanctions on junta veterans to remain, but I would not be surprised if some measures are lifted.

(Editing by Alan Raybould)