Senior US and UN officials said they were encouraged by nascent reforms in Burma, with Washington saying it will look at new incentives to spur change including the expansion of microfinance.

In a first, Burma allowed in the US assistant secretary of state handling human rights, Mike Posner, who said he voiced concern about the treatment of ethnic minorities and political prisoners but also saw signs of progress.

“There are some encouraging steps and signs. We need to go forward in a way that recognizes what’s been done and what’s being done that is positive, and build on that,” Posner said at the US embassy on Friday.

Vijay Nambiar, special advisor to Secretary General Ban Ki-moon, also said the UN was encouraged by the “significant efforts” under nominally civilian President Thein Sein to bring reconciliation in the divided country.

“If sustained, these and other efforts offer a historic opportunity to set the country on a course than can fulfill the promises made to the people of Myanmar [Burma],” Nambiar said in a statement after meeting with top government members and pro-democracy leader Aung San Suu Kyi.

Posner accompanied US special envoy to Burma Derek Mitchell, who paid his third visit since September to the country, where earlier this year the military nominally handed power to civilians.

Mitchell said that President Barack Obama’s administration, which launched an engagement drive with Burma in 2009, was ready to respond to concrete progress, although an end to sanctions would need to come from the US Congress.

“There’s a natural inclination in Washington toward pressure. We need to start thinking about how we respond to reform, as we see it happen. And we can support reform, get behind it and encourage further reform,” Mitchell said.

Mitchell said he spoke with Aung San Suu Kyi about expanding microfinance — small loans offered to farmers and other low-income people to help them build livelihoods.

The US Agency for International Development already has a program but wants to expand it to ethnic minority areas of the country, Mitchell said.

The envoy said that the United States had also used travel as an incentive, noting that the administration invited Burma’s foreign minister, Wunna Maung Lwin, to Washington in September.

Burma recently defied China by freezing work on an unpopular dam in a border area. The government also announced a prisoner amnesty, although critics say the step is symbolic as few high-profile inmates were freed.

“We welcome the release last month of more than 200 political prisoners, but continue to strongly urge that the remaining political prisoners be released immediately and unconditionally,” Posner said.

Posner raised specific cases of prisoners and understood that Burma is considering their release, although there were no clear promises, Mitchell said.

“There was no concrete sense of a release or release date of any sort in the conversation. There is clearly a discussion going on internally about it, though,” Mitchell said.

Amnesty International said that Burma is believed to be depriving some 15 political prisoners of drinking water, with eight held in cells designed for dogs without beds, mats or windows.

The human rights group also expressed fears about the serious illness of Ashin Gambira, a prominent Buddhist monk held in solitary confinement in northern Burma’s Kale prison for his role in anti-government protests in 2007.