Economy and Financial Affairs
- Tue Aug 02 2005
Source:
Japan Network on Debt and Poverty
Yoko Kitazawa
Mr. Junichiro Koizumi, the Prime Minister of Japan committed to increase Japan's Official
Development Aid (ODA) to developing countries by US$ 10 billion for the coming five years. However, as soon as he returned to Japan, he has unable to live up to his own promises.
Mr. Junichiro Koizumi, the Prime Minister of Japan made a pledge to increase Japan's Official Development Aid (ODA) to developing countries by US$ 10 billion for the coming five years at the G8 Summit Meeting held in Gleneagles, Scotland in July 2005.
His pledge was made after he saw that the rest of his colleagues started to make a bold pledge to fulfill aid to developing countries up to 0.7% of their Gross National Income (GNI) by the years 2012 (France), 2013 (the UK), and 2015 (Germany). Even the US has been increasing its ODA since September 11, 2001, its Africa aid being four-fold.
However, Mr.Koizumi declined to make a similar pledge as to the 0.7% quota, since Japan's ODA remained 0.19 % of its GNI in 2004, the lowest of the G7. During the last five consecutive years, Japan's ODA has been decreasing, and there is no intent in changing its trend for some time to come.
When Mr. Koizumi came back home from Gleneagles, he had completely forgotten his pledge made at the Summit the same as it had happened before. He abandoned his leadership as Prime Minister to fulfill his pledge, so now it has become the duel between the Ministry of Foreign Affairs and the Ministry of Finance. The former wishes to obtain new money for aid from the Budget in order not to isolate Japan from the international community, and the latter is trying to curtail any extra budgetary expenditure. As usual, those who have a purse win the battle.
The final outcome has been that the extra US$ 10 billion would not be an additional ODA, but would cover cancellation of the Iraqi debt and rescheduling of debt service by the Tsunami affected countries such as Indonesia and Sri Lanka instead. As to the ODA to Africa, Japan will increase 1.6 billion for the coming three years. However, this would be taken from the grant aid to other areas. In addition, it is less than the amount that the US, Germany and France provide to Africa at present.
Japan's ODA consists of two categories: one is grant aid drawn from the tax revenue and the other is a loan paid in the form of Yen (Yen loan) provided by the Japan Bank of International Cooperation (JBIC) originated from the people's savings at Post Offices. Yen loans have been given mostly to neighbouring Asian countries in the forms of building huge infrastructure projects such as dams, highways, international air and sea ports, Free Trade Zones, etc.
Up to the 1980s, the amount of grant aid and Yen loan have been almost even. Since the 1990s, when Japan's interest rate dropped to zero, the amount of debt services including interest payment with a significantly high rate for that time, became equal to the ones of newly provided Yen loan. According to the Development Co-operation Directorate (DAC) standard of calculating ODA, the amount of new loans should be automatically deducted from those of the repaid. Therefore, Japan's current Yen loans could not be counted as ODA.
In 2004, Japan provided the first substantial (US$ 8.86 billion) ODA to the various UN organizations and the International Development Association (IDA), followed by a bilateral grant aid to developing countries, and technical assistance. As for Yen loan, Japan rendered US$ 5.05 through the JBIC, and at the same time, the recipient countries in Asia repaid US$ 5.0 as debt service to JBIC in 2004. In that same year, Japan also cancelled US$ 2.25 billion of debt to Iraq and rescheduled the debt of Tsunami affected Asian countries.
In short, Japan will not provide any new money to developing countries nor to Africa. The Japanese government flatly ignores the international efforts to achieve the Millennium Development Goals agreed by over 150 Heads of State in 2000. Mr. Koizumin has betrayed his own pledge made at the G8 Summit.
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