(ii) Assistance will be provided for capacity building to enable governments of developing countries to formulate and implement appropriate development strategies.

(iii) In order to minimize the impact on the poor of economic crises, inflation and similar events, macroeconomic stabilization through appropriate fiscal and monetary policy is essential. To this end, assistance such as dispatching experts will be provided to build the capacity of government officials.

## (2) Sustainable Growth

### i. Japan’s position on sustainable growth

(a) In order to reduce poverty and to ensure that the results of development are sustained, sustainable growth is essential for developing countries. As the leading role of the private sector is key to sustainable economic growth, it is important to promote private sector activities, including trade and investment through ODA. In addition, it is important that ODA be provided to help developing countries participate in the multilateral free trade system.

(b) As a country that receives benefits from international trade and that is heavily dependent on other countries for resources, energy and food, Japan will actively contribute to the sustainable growth of developing countries through ODA. This is highly relevant for ensuring Japan’s security and prosperity, thus promoting the interests of the Japanese people.

(c) It is important to analyze the impediments to sustainable growth on a country basis and to assist in the provision of socioeconomic infrastructure, policy formulation, institution building, and development of human resources in a comprehensive manner according to the specific circumstances and stage of development of each country. Through the provision of such comprehensive assistance, improvements in the investment climate and the attainment of sustainable economic growth in recipient countries will be pursued.

(d) The increasing number of economic partnerships in recent years play an important role in facilitating cross-border flows of people, goods, capital and information, and these have contributed to the overall growth of the countries concerned by liberalizing trade and investment and by promoting the harmonization of economic systems. Japan is working toward strengthening economic partnerships with other countries beginning with countries in the East Asia region. For those developing countries with which Japan is seeking economic partnership, Japan will make strategic use of ODA to assist in establishing a trade/investment environment and economic infrastructure that will make such partnership more effective.

### ii. Approach to sustainable growth and specific actions

## (a) Development of economic and social infrastructure

Infrastructure is of fundamental importance in promoting private sector activities. Japan has actively supported the provision of economic and social infrastructure underpinning economic growth through such means as yen loans, and has played a particularly major role in providing the basis for economic growth mainly in the Asia region. Promoting the development of economic and social infrastructure requires appropriate levels of medium- to long-term funding, and there are still only a limited number of developing countries that can secure sufficient levels of funding from their own revenues and private capital. From this standpoint, Japan will assist in the provision of economic and social infrastructure that contributes to improvement of trade and investment climates, such as roads, ports and other transport infrastructure, energy related infrastructure such as power generation and transmission facilities and oil and natural gas facilities, telecommunications and IT infrastructure, and infrastructure for improving the living environment, while paying particular attention to the institutional and policy environment and debt management capacity of developing countries. Assistance with infrastructure will be complemented by assistance in intangible areas of infrastructure, such as the promotion of sector policy formulation and dialogue, and development of human resources, so as to ensure that infrastructure is sustained.