The United States kept Myanmar, Bolivia and Venezuela on its drug trafficking "black list" Friday, but said Yangon's recent reforms merited a "national interest waiver" for aid.
For the fourth year running, Washington accused all three countries of having "failed demonstrably" to fight the drug trade.
But President Barack Obama's administration noted that Myanmar, which has been blacklisted since 2002 and is the world's second largest cultivator of opium poppy, has made significant strides this year in joining the international fight against illegal drugs.
Myanmar officials have already destroyed more than three times the amount of opium poppy lands as they did last year, according to the president's annual memorandum to Secretary of State Hillary Clinton that helps set US drug policy.
The country has also strengthened cooperation with regional and international partners, and engaged with the UN Office on Drugs and Crime.
Nonetheless, "Burma's current counternarcotics performance is not sufficient to meet its international counternarcotics cooperation obligations," Obama said, using Myanmar's former name as is standard with US government communications.
However, Obama added that "given the government's demonstrated commitment to reform and promising signs of action on future poppy eradication, it is in the interest of the US government to grant Burma a national interest waiver," meaning US support will continue there.
Last year, there was no cooperation with Myanmar, which was ruled for decades by a military junta before the generals gave power to a nominal civilian government in 2011.
Obama said maintaining aid to Venezuela and Bolivia was also "vital to the national interests of the United States," despite the counternarcotics failures of the two Latin American nations.
Venezuela remains "one of the preferred trafficking routes out of South America," thanks to its "porous western border with Colombia, weak judicial system, inconsistent international counternarcotics cooperation and generally permissive and corrupt environment," Obama wrote.
The government of leftist President Hugo Chavez, a staunch US critic, officially renounces illegal drug trafficking, but Obama alleged that some officials were "credibly reported" to be involved in the drug trade.
The president's report cheered some success in Bolivia, especially those backed by the US government, but noted that overall, the country has made a "negligible contribution" to global counternarcotics efforts.
The memo also noted that senior Bolivian officials have been arrested for "facilitating drug shipments."
Bolivia responded by "vigorously" denying Washington's allegations, saying they do not reflect La Paz's counternarcotics efforts. A foreign ministry statement said the Andean nation will release its own coca cultivation monitoring report on Monday.
Bolivia, Myanmar and Venezuela are among more than 20 countries -- including Afghanistan, Colombia and Mexico -- listed as "major drug transit and/or major illicit drug producing countries" in the 2012 memorandum.