Japan to reduce overseas construction aid

TOKYO: Japan plans to cut its official aid for construction projects in developing nations by 15 per cent over the next five years, a foreign ministry report showed yesterday.

Officially pacifist Japan, the world’s second largest economy, relies on development aid, particularly low-interest loans, to promote its foreign policy.

But the government report said Japan would seek to “streamline aid projects by reducing costs and improving content.”

Japan’s overseas aid expenditure has declined for the past years as the government tries to reduce a huge fiscal deficit left over from a series of economic stimulus packages following recession in the 1990s.

Japan fell to fifth place from third in the Organisation for Economic Cooperation and Development’s ranking of donors in 2007 after a 30 per cent drop in aid from the previous year.

Earlier this week an advisory panel to the Japanese government voiced concern about the reduction in official development assistance (ODA).

“The ODA is the foundation of Japan’s diplomacy,” the panel said in a statement, warning that the cutbacks could “critically harm Japan’s national interest.” In recent years, Japan has redirected aid spending to countries, many in Africa, seen as pivotal in its cherished bid for a permanent seat on the UN Security Council.

Japan also plans to end most aid to China — a rising regional competitor which has opposed Tokyo’s UN bid — by the time of the 2008 Olympics which are expected to showcase Beijing’s newfound global clout.

By AFP