Since loans make up close to half of Japan's huge aid budget, debtrelief remains a troublesome policy Tamaki Tsuda, of the loan-aid division of the Foreign Ministry'sEconomic Cooperation Bureau, in factsays Japan wants to nurture sustainable development in developingcountries and this means encouraging recipient countries to beresponsible in repaying loans. In response to external pressure, Japan has already embarked onproviding debt relief to 19 HIPCs under a system where grants areextended to a country for the repayment of a prior debt. Japan also provides 10 million dollars to a World Bank trustfund set up to give credit relief to developing countries. Officials here say that Tokyo cannot cancel its loans wholesale - for the simply reason that it cannot afford to. The Nikkei Weekly newspaper saidthis week that it will be difficult to give outright debt relief,given this system which could harm the assets of Japanesenationals.
Every country has a different situation.
Japan will try hardto meet Germany's proposal in its own way,'' said the foreignministry official. The loans are to help Japanese companies which are involvedin the expensive infrastructure projects in Southeast Asiancountries, not really for poverty reduction,'' said Matsumoto. In short, as the debate over the G-7 proposal for debtcancellation shows, Tokyo may have to pay more and more of apolitical price for running its aid program as a business.