The European Union is giving close to $270 million to Zimbabwe, the first direct aid to President Robert Mugabe's government since the bloc imposed sanctions in 2002.
The aid package, unveiled Monday in Harare, will fund health care, agriculture and good governance projects over the next six years.
For years, the EU has funneled aid to Zimbabwe through third party groups because of documented corruption and human rights abuses by Mugabe officials and allies.
Following pressure from African nations, the EU has gradually lifted travel and financial restrictions on some Zimbabwean officials, but, the sanctions for President Mugabe and his wife Grace remain in effect.
At Monday's signing ceremony, Zimbabwean Finance Minister Patrick Chinamasa welcomed the EU aid but asked that the sanctions against the Mugabes be lifted immediately.
Zimbabwe has endured years of political turmoil and weak economic growth since the early 2000's. The government angered donors with a series of controversial moves, including the alleged rigging of the 2002 elections and the confiscation of commercial farms owned by whites.
EU Ambassador to Zimbabwe Philippe Van Damme said the aid package marks an important step in EU-Zimbabwean relations but warned problems could still emerge.