Japan's position on untied aid

By Mr. Yutaka Iimura

(This letter was written in response to the article appeared in Financial Times, 19 June 2000, regarding the position of Japan on untied aid.)

Sir,

Your editorial ("A shameful way of giving aid") and report ("Tied aid plan at risk") of June 19 did not correctly reflect Japan's efforts to untie its Overseas Development Aid nor the ongoing discussions in the OECD's Development Assistance Committee.

Japan is a strong proponent of untying aid and has clearly demonstrated its commitment. Its ODA loan was 100 per cent untied on a commitment basis for fiscal year 1996, and in the same fiscal year 47.6 percent of its grant aid for general projects was locally procured.

The reference in the report to Japan, France and Denmark as last minute objectors to the planned agreement on untying aid to the world's poorest countries (LLDCs), creates a misleading impression because these three nations are major donors to LLDCs in terms of absolute volume (Japan and France) and in terms of ODA ratio to LLDCs (Denmark).

Although some OECD countries have untied their ODA to a greater extent, a considerable number maintain a low ratio of untying aid, the EU being one organization that still seems reluctant to untie its own aid.

It is regrettable, therefore, that the total level of untied aid will not improve because the tying practices of major donors are excluded from the scope of the agreement under discussion within the DAC. In order to make efforts for untying aid sustainable, donor countries should promote similar efforts.

It is Japan's position that targets should be set for integrating the untying practices of as many DAC members as possible in a given period, taking the present level of tying practices as a starting point, in order to give due consideration to those donors that have high aid tying ratios.

It is a cause for grave concern that your report did not reflect the whole spectrum of issues, which could lead your readers to lose sight of the underlying problems of this matter.