combine various forms of aid modalities in the most appropriate manner according to the recipient country's administrative and financial management capacity and development needs. And Japan also considers that the provision of budget support is important to assert the effectiveness of such manner of assistance. This also leads to increasing the aid effectiveness of Japan's ODA focusing on project-type assistance. Therefore, Japan will carefully examine countries by the following conditions in order to implement budget support: (1) the recipient country is a Low Income Country that has a stable political and macroeconomic situation and commits to working on public administrative reform, democratization, poverty reduction, economic development, etc. with self-help efforts; (2) the recipient country has formulated a PRSP and has established a framework for budget formulation reflecting the PRSP; (3) the recipient country has established monitoring and evaluation systems to confirm the implementation of the PRSP, including public financial management, in cooperation with donors and also has the minimum level of public financial management capacity; (4) the recipient country makes efforts to increase its own revenues, such as efforts for economic growth and tax reforms, so as to prevent an increase of aid dependency of the recipient country; and (5) the recipient country is one of the priority countries for Japan's ODA provision, Japan has adequate capacity regarding its local missions to make appropriate policy proposals, and has a presence in one or more priority sectors among stakeholders including donors in the recipient country.

## Section 3 Issue-Specific Efforts

### 1. Poverty Reduction

Poverty reduction is an important development goal that is shared in the international community, and the ODA Charter also puts it at the head of the priority issues. Japan has been supporting human and social development in developing countries with an emphasis on cooperation in such sectors as "education, health care and welfare, water and sanitation, and agriculture," that is, in Basic Human Needs, which forms the backbone of MDGs.

Japan is making efforts for poverty reduction by formulating and announcing various initiatives in such MDG-related sectors. Since the achievement of MDGs will be taken up in the interim review of the Millennium Declaration that is scheduled for 2005, poverty reduction is expected to be continuously discussed in the international community as an important issue. Japan will continue to actively implement ODA in this sector.

In addition, it is clear that support in Basic Human Needs, which is directly related to people's livelihoods, is important when working on poverty reduction, but at the same time, it is also necessary, in order to achieve sustainable poverty reduction, to take an approach to poverty reduction through economic growth in consideration of experience in the economic development of Eastern Asia. The following explains Japan's support for poverty reduction based on such an idea.

## (1) Education

Education is an important social capital that brings development of a country. In particular, basic education is essential for people to acquire knowledge, values and skills, which serve as a basis for their living. It is widely known that basic education has a large impact on poverty reduction in developing countries, and thus, the "Education for All" $ ^{*1} $ and MDGs advocate "ensuring universal primary education for all children by 2015" as an achievement goal. Japan has been steadily implementing the "Basic Education for Growth Initiative (BEGIN)" announced in 2002, and has been providing active support for improving the current conditions of developing countries while setting the following priority areas: (1) assistance for ensuring "access" to education; (2) assistance for improving "quality" of education; and (3) improvement of "management" of education.

Regarding "access" to education, Japan has been contributing to improving children's access to education and the educational environment through construction and rehabilitation of educational facilities and provision of learning materials for primary and secondary schools. In fiscal year 2003, approximately 2.2 million children benefited from the

## $ ^{*} $ I: Education for All

This is an initiative confirmed at the "World Conference on Education for All" held in Jomtien, Thailand in 1990. At present, it means the achievement of six specific goals (Dakar Framework for Action) in the educational sector, such as "ensuring universal primary education for all children by 2015" and "achieving a 50 per cent improvement in levels of adult literacy by 2015," which were confirmed at the World Education Forum held in Dakar, Senegal in 2000.