The Foreign Ministry will provide an additional $400 million, or about 44 billion yen, in grants for Iraq’s reconstruction in fiscal 2005 because it has become difficult to extend loans to the country from the next fiscal year as initially planned, according to ministry sources.
Japan initially planned to resume yen loans to Iraq from fiscal 2005 after disbursing by the end of fiscal 2004 all $1.5 billion in grants that Tokyo had pledged.
But Japan may not be able to resume loans because Iraq’s external debt problem has not been resolved, the sources said.
Under such circumstances, there is a need for “bridging” aid, because Japan has played a leading role along with the United States in assisting Iraq’s reconstruction, the sources said.
Japan is a major creditor nation to Iraq. It committed $5 billion in aid — $1.5 billion in grants and $3.5 billion in yen loans — at an international donors’ conference for Iraq held last October in Madrid.
It is unclear whether the $400 million in grants will be newly provided in addition to the $5 billion in aid, or redirected from the $3.5 billion in loans.
One of the sources indicated the possibility that the $400 million in grants may be secured by reducing the same amount from the pledged yen loans.
The plan is expected to be welcomed by some Liberal Democratic Party lawmakers who are involved in defense affairs and have called on the government to expand assistance to Iraq.
The lawmakers believe it is necessary to boost aid for reasons such as improving security to help protect the Ground Self-Defense Force troops deployed in the southern Iraqi city of Samawah on a reconstruction mission.