DEVELOPMENT-JAPAN: Aid Budget A Casualty of Tough Times

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Aug 11 1998 (IPS) - Japan’s recession threatens to shrink its foreign assistance budget for 1999, even though the country’s aid funds are still the world’s largest and a lifeline for many poor and struggling countries.

Experts contend that the stalled growth of money for overseas aid is the most obvious difference shaping up in Japan’s development assistance programme, as the government struggles to pull the country out of its worst postwar recession.

The foreign ministry, responsible for proposing and fine-tuning the budget for official development assistance (ODA), has virtually confirmed a drastic cut in already falling levels of foreign aid.

“It looks like we won’t be able to respond to international expectations (on Japan’s ODA contributions),” a senior foreign ministry official commented last week, when asked about the new ODA budget.

The foreign aid budget will be announced by the government by the end of March 1999, ahead of the next fiscal year that begins in April.

At the same time, Japan is having to prune its domestic budget. The same foreign ministry official warned that other budget cutbacks, which news reports have put at some 240 million dollars, are to be expected at a time of tight fiscal policy.

Analysts say the yen’s weakness — which is making much of Asia nervous these days — is already cutting into ODA funds.

The U.S. dollar was quoted at 146.64-66 yen in Tokyo Tuesday. If the yen’s value is calculated at 140 yen to the dollar, an extra 137 million dollars would be needed in fiscal 1999 to carry out projects with the same amount in dollar terms as in the current year, ministry officials point out.

Japan’s economic woes have already been putting pressure on aid funds. For fiscal 1998, which ends in March, the the country’s overall ODA budget declined 10.4 percent from the previous year to 1.05 trillion yen, or about 7. 2 billion dollars.

In 1996, Japan spent the equivalent of 9.6 billion dollars on ODA, which was about 35 percent lower than the previous year’s outlay.

But despite the cuts and yen’s depreciation, Japan in 1997 and 1998 remained the world’s top donor, a position it has held for the past seven consecutive years.

In a foreign ministry statement issued at the beginning of August, Japan stressed it would use its 1999 ODA budget to help economically-stricken South-east Asia.

The South-east Asian economic crisis “is expected to worsen in the next two to three years,” said the ministry’s report on ODA policy priorities. The report is being used in preparing new budget requests.

More assistance for boosting poverty and education programmes in those affected countries has been outlined as top priorities of Japan’s ODA budget for 1999. There will also be more aid for environmental efforts, and programmes to help foreign students studying in Japan.

The report also calls for more aid to African nations as Tokyo is to host the second global conference on African development aid in October.

Japan is also trying to make its ODA programme and funds help ease economic headaches at home, where unemployment has reached a record 4.3 percent in June, the highest level in postwar years.

Recently, the foreign ministry issued a statement proposing more spending on recruiting unemployed, middle-aged and elderly people to take part in overseas development projects. Officials say using private-sector people is part of a programme to ease the effects of corporate restructuring across Japan.

Japanese non-governmental organisations, which are also struggling with a slide in membership and donations as due to the recession, will also receive funding from the 1999 ODA budget.

Professor Ryokichi Hirano, an ODA consultant to the government, says the tougher economic climate means changes such as the injection of more responsibility and accountability in aid policies.

“Compared to 20 years ago, Japan’s foreign policy, of which ODA plays a major role, is beginning to reflect the view of the people rather than bureaucrats who basically followed the policies of the U.S. government,” he explained.

As a result, points out Hirano, the world’s largest ODA programme will now be more open for debate and will be used by the government to directly support Japan’s interests in developing countries.

At present, there are opportunities that Japan misses in using its economic clout to serve strategic interests. An example touted in the Japanese media is the nuclear tests by India and Pakistan — and how Tokyo should have had the means to slap faster sanctions on them.

A bill to be called the ODA Basic Law, which would allow the government to act quickly on sanctions instead of waiting for the bureaucracy to move, is now pending in the Diet or Parliament.

The bill, supported by Hirano and many development experts, is expected to bring the huge ODA budget under the control of the Diet, and away from the foreign ministry bureaucracy.

Hirano says such a move encourages a public debate and lets taxpayers know how their money is spent. “In times of fiscal crisis, the government is obliged to tell people more about ODA spending,” explained professor Atsushi Kusano of Keio University, a member of a task force on the proposed law.

The move toward greater transparency is in line with growing calls among Japanese questioning the effectiveness of foreign aid to developing countries amid the region’s economic crisis.

Likewise, more people are asking that Japan use money to shore up its own economy instead of supporting “wasteful” projects abroad.

Last month’s Upper House elections, where the ruling Liberal Democratic Party lost bitterly, was a clear signal of a clamour among Japanese voters for change in Japan’s traditional ways of governance.