Japan will waive all its outstanding loans in unofficial development assistance to heavily indebted poor countries so it can quickly introduce an international debt-relief initiative for HIPCs that was adopted at last year’s Group of Seven summit in Cologne, Germany, the government announced Monday.
Under the debt-relief measures to be introduced this fiscal year, the government will raise the reduction rate for non-ODA loans from 90 percent to 100 percent, an official said.
Tokyo has already waived 90 percent of the 140 billion yen worth of non-ODA loans granted to HIPCs up through the last fiscal year, which ended March 31, and the latest measures will erase the remaining 14 billion yen, the official said.
Non-ODA loans consist of trade insurance and loans extended by quasigovernmental bodies, such as export-import banks.
As the chair country of the Okinawa Group of Eight Summit in July, Japan wants to quickly introduce the Cologne Debt Initiative for HIPCs, which consist mostly of sub-Saharan African countries.
The other G7 nations, with the exception of Germany, have already indicated they would be willing to waive all non-ODA debts owned by the world’s poorest nations. These nations are the United States, Britain, France, Canada and Italy.
Observers had been watching how Japan would tackle the issue, given that Tokyo holds the rotating chair of the G7 this year.
Other steps Japan announced Monday include an additional disbursement of $190 million to the World Bank’s HIPC trust fund and an increase in the budget for grants-in-aid for HIPCs, the official said.
With the additional pledge, Tokyo’s total disbursement to the World Bank fund will reach $200 million, the official said.
Japan has long focused on the issue of HIPCs from a standpoint of promoting peace and security as well as out of humanitarian concerns. Thus, the government will call on other creditor nations, related international bodies and HIPCs themselves, to strive to carry out the Cologne Debt Initiative, the official said.