World Bank asks Japan to maintain foreign aid

by Yasushi Azuma

Kyodo News

Japan should remain committed to lifting millions of people around the world out of poverty and not be shortsighted about foreign aid even though it is under budget constraints, a top executive of the World Bank said.

“Given the size of the Japanese economy, the outside world does not understand budget constraints,” Praful Patel, the World Bank’s vice president for South Asia, said in an interview this week.

As part of efforts to trim spending to reduce the burden on the debt-ridden state finances, Japan has slashed its official development assistance for the eighth straight year through fiscal 2007.

Patel, who made a two-day visit to Japan through Tuesday, said he hopes Tokyo will reverse its declining trend in ODA, saying Japan should continue to play a leading role in assisting developing countries, including those in South Asia.

He said that continuing to provide aid to South Asia will serve Japan’s interests as well, citing benefits for the private sector.

“The fastest growing region in the world is South Asia, with the fastest growing consumer population, or middle-class,” he said. The World Bank projects the Indian economy, the largest in the region, to grow at 9 percent in 2007.

The almost 400 million Indian people will increase demand for consumer products, including those made by Japanese firms, Patel said.

“It will be a huge market opportunity,” he added.

Boosting foreign aid to South Asia will also help stem the growth of extremism and terrorism, and eventually lead to ensuring stability and peace in the region, the World Bank executive said.

In addition, the region is geopolitically important for Japan, he said. The sealane that runs through the Indian Ocean needs to be safe and open for the Japanese economy, he pointed out.

Thanks to foreign aid by Japan and other donor countries, as well as multilateral aid organizations, South Asian countries have seen remarkable progress in reducing poverty recently, Petal said.