ODA, OOF and trade insurance will have to be maintained along with complementary links between such financing and programs of international development institutions. In this regard, the Japanese government launched the Overseas Infrastructure Business Promotion Study Group in 2002. Based on proposals by the panel, the government in fiscal year 2003 considered utilizing private-sector funds and combining them with official funds for financing power sector projects in China, the Philippines and Vietnam. Feasibility studies were also conducted on 12 promising projects for the combination of ODA and other official funds.

Moves are also underway to enhance ODA projects' partnerships with the private sector. For example, JICA has used private-sector resources, proposals and know-how for technical cooperation projects in developing countries. They are called "PROTECO (Proposal of Technical Cooperation)." In fiscal year 2003, JICA implemented seven PROTECO projects, including the "Project for Improvement of Lives of Women in Marginalized Communities in Urban Zone of Chiapas State" for education system improvements with local residents' participation to increase Mexico's overall school attendance rate for primary education. They also included the "Project for improvement of health service with a focus on safe motherhood in Kisii and Kericho districts" to exploit a facility built with Japanese ODA for improving healthcare services in Kenya. The JBIC has introduced Pilot Studies for Project Formulation and Pilot Studies for Project Identification since fiscal year 2001 to promote national participation in Yen loan projects and grasp various assistance needs in developing countries in detail. In the Pilot Studies for Project Formulation, proposals by organizations in Japan are used for accumulating useful knowledge and information for Yen loan projects. In the Pilot Studies for Project Identification, such proposals are used for identifying and forming specific projects. In fiscal year 2003, the JBIC conducted six Pilot Studies for Project Formulation and eight Pilot Studies for Project Identification.

## (7) Addressing Debt Problem

The debt problem is one of the major problems affecting sustainable growth of developing countries. Developing countries, which have traditionally introduced foreign loans to finance their development, saw their international balance of payments deteriorating during the oil crises in the 1970s and primary product price falls from the second half of the 1970s. Since then, many developing countries have had debt that they cannot sustain under their respective circumstances.

In response to such situation, Japan has cooperated with other Paris Club $ ^{13} $ creditor nations in rescheduling debts and has implemented debt relief grant aid to the poorest countries under the 1978 UNCTAD TDB (Trade Development Board) resolution. $ ^{14} $ The Paris Club had used only rescheduling $ ^{15} $ as its debt relief measure. Since the second half of the 1980s, however, the group has introduced debt reduction measures. Only bilateral debts had been subject to rescheduling or reductions through the Paris Club. Debts to international financial institutions had not been subject to such relief measures. However, the Lyon Summit in 1996 produced an agreement on the "HIPC (heavily indebted country) Initiative" for international financial institutions and commercial creditors as well as creditor nation governments to implement measures for reducing HIPC debts to sustainable levels. At the Cologne Summit in 1999, the HIPC Initiative was expanded. The Cologne debt initiative has been retained as the expanded HIPC Initiative. Japan has proactively participated in and contributed to international discussions on such debt reduction measures, and has cooperated with international society in taking debt relief measures for heavily indebted countries (see page 116 of ODA White Paper 2003 for details of measures to address the debt problem).

The statement on "Debt Sustainability for the Poorest" at the Sea Island G8 Summit in 2004 reaffirmed major industrial countries' commitment to full implementation of the HIPC Initiative fully and to supporting debt sustainability in the poorest countries. The statement also said the G8 nations would work with other donors and the international financial institutions to extend the sunset date of the HIPC Initiative until December 31, 2006, and to provide the necessary financing for the completion of the initiative, and would consider measures that can further help the poorest countries address the sustainability of their debts.