Experts lament cuts in Japan's foreign aid

by Yasushi Azuma

Kyodo News

Development experts lament recent cuts in Japanese foreign aid and are calling for a reversal of the trend, saying such spending benefits Japan’s interests in addition to helping millions in poverty.

Kiyoshi Kodera, executive secretary of the Development Committee, a joint ministerial panel of the World Bank and the International Monetary Fund, said Japan has already cut too much of its foreign aid budget.

“Of course, fiscal consolidation is very important for Japan,” said Kodera, a former Finance Ministry bureaucrat. “But Japan should make a contribution to match its position as the world’s second-largest economy.”

The government again plans to cut spending for official development assistance in the fiscal 2008 budget. The planned reduction is based on the government’s 2006 economic policy guidelines, which recommend cuts of 2 percent to 4 percent in ODA outlays over the five years beginning in fiscal 2007.

The government earmarked ¥729.3 billion for ODA in the initial budget for this fiscal year on a general account basis, down 4 percent from the previous year and the eighth straight annual decline.

“Japan may fall behind France and Germany soon if it continues to cut its foreign aid budget,” Kodera said.

According to Foreign Ministry data, the U.S. ranked first among aid donors at $22.74 billion in 2006, accounting for 21.9 percent of the world’s total.

Britain came in second at $12.61 billion, a 12.1 percent share, moving ahead of Japan, whose ODA totaled $11.61 billion, accounting for 11.2 percent.

The U.S. boosted its foreign aid after the 2001 terrorist attacks and European countries followed suit, believing that alleviating poverty would help eliminate terrorism.

Kodera said European countries emphasize foreign aid “as a political priority,” and he hopes this trend will prevail in Japan.

Some analysts see declines in the ODA budget as inevitable due to its dwindling role in Asia, which has seen income growth in many countries.

“Japan used to pass its successful experience onto the rest of the Asian countries through ODA, but its role in Asia has been diminishing,” said Kenichi Takayasu, senior economist at the Japan Research Institute.

He said Japan appears to be complacent with its position as “a big brother in East Asia,” though it was eager to boost its presence as “a global actor” in the 1980s by increasing foreign aid.

Takayasu said that although he is not really concerned about Japan’s international ranking as a donor, Tokyo must not cut the ODA budget beyond the minimum level necessary to maintain its contribution to the international community.

“Reducing the ODA budget by ¥20 billion, for example, may be insignificant in Japan. But such a sum means a lot in developing countries.”

There appears to be some hope for change. Kodera said he heard some lawmakers in the Liberal Democratic Party have begun to question the wisdom of slashing the aid budget by nearly 40 percent over the last 10 years.