Australia will also remove all its economic sanctions against Myanmar except an arms embargo, Carr said after concluding a three-day visit to the country.
He met Myanmar President Thein Sein in Naypyitaw Thursday.
Australia eased travel and financial restrictions on about 260 Myanmar nationals, including President Thein Sein, in April.
“In meetings over the past two days, I’ve gained a first-hand appreciation of the reform effort under way,” Mizzima News quoted Carr as saying Friday.
“The point has been reached where lifting sanctions is the best way to promote further progress,” Carr said.
Australia will continue to support Myanmar in economic and social development, he said.
Both sides discussed cooperation in tourism, mining, technology, education, health and military.
Carr met opposition leader Aung San Suu Kyi at her residence in Yangon Wednesday.
He invited her to visit Australia and she accepted his request for a trip next year. She welcomed Australia’s decision to ease sanctions against her country.