most other major donor countries have a more focused aid philosophy, in part possibly reflecting the more centralized nature of aid administration.<sup>9</sup>

# **3. The Budgetary Process of Japanese ODA**

Japan's ODA budget is funded from (a) the general account of the central government budget, (b) the Fiscal Investment and Loan Program (FILP), and (c) interest payments and repayments of principal on previous ODA loans as well as carryovers from previous years, under the trust funds (special accounts) of the central government budget. Two types of budgets, the ODA budget in the general account and the overall ODA budget, are prepared every year (see, for example, the fiscal 2001 budgets in Table 4). The overall ODA budget is the sum of the ODA budget in the general account and other sources. Typically, in gross terms, the overall budget is close to twice the size of the general account budget. Though not shown in the table, Japan's OOF is financed mainly by non-general account sources.

**Table 4. Japan's ODA Budget, FY 2001 (Billion yen)**

||**General Account**|**Other Sources**|**Overall Budget**|
|---|---|---|---|
|**Grants**|740.3|179.2|919.5|
|**Bilateral**|606.6|23.9|630.5|
|**Multilateral**|133.7|155.3|289.0|
|**Loans**|306.3|660.5|966.8|
|**Gross Total**|1,046.6|839.7|1,886.3|
|**Less repayment**|--|374.8|**374.8**|
|**Net Total**|**1,046.6**|**464.9**|**1,511.5**|

_Source:_ Government of Japan.

Non-general account sources are funded through the FILP, which is an off-budget, government-supervised program of borrowing and lending. Most of the resources in the FILP have come from postal savings deposits, postal insurance premiums, and provident pension fund contributions entrusted with the Trust Fund Bureau of the Ministry of Finance, but some have also come from capital market funding. Almost all OOF activities have been financed through borrowing from the Trust Fund Bureau and the capital market. In April 2001, the FILP restructuring process began to separate the lending activities from the statutory funding activities in order to bring greater market discipline into the FILP.'<sup>0</sup> As a result, postal savings deposits, postal insurance premiums, 9 For example, according to the United Kingdom's official position, its "development strategy is now focused on the reduction of abject poverty in the world" and is committed to focus all of its "development efforts on the achievement of the International Development Targets," as formulated by DAC members in May 1996 (United Kingdom, Departmnent for International Development, _White Paper on International Development,_ 2000). The position of the United States, on the other hand, is somewhat more diffused, as it attempts to accomplish both foreign policy objectives and humanitarian goals. Even so, its aid philosophy is focused on dealing with "the two most distinctive trends in the world since the fall of the Berlin Wall, globalization and conflict" and its aid activities are carried out under three "pillars": economic growth and agriculture, global health, and conflict prevention and development relief (Testimony of Andrew Natsios, Administrator of USAID, before the Senate Appropriations Committee, May 8, 2001).

10 Starting in April 2001, the Trust Fund Bureau began to issue FILP bonds to finance its FILP activities. However, as a transitional measure to a more fully market-oriented regime, the postal savings and insurance, as well as pension fund schemes, are required for seven years to channel the contributed funds to the Trust Fund Bureau through purchases of these FILP bonds. The Trust Fund Bureau lends money to 7