I. Grant Aid

1. Introduction

What is Grant Aid?

Grant aid is a form of financial assistance extended to a developing country (a recipient country) without an obligation for repayment.

A Brief Profile of Grant Aid

    Japanese grant aid is, in principle, extended in the form of funds and does not take the form of a donation of goods, such as materials, equipment, and facilities.
    The funds extended to developing countries are utilized for procurement of materials, equipment, and services (e.g., technology, transportation) that are required for economic and social development.
    Japan first began providing assistance in the form of grant aid in 1968.
    Since then, the quantity of grant aid has substantially increased and measures have been taken to improve the quality of grand aid. Today, grant aid has become an indispensable pillar of Japan's ODA program, and its role in diplomacy is gaining in importance.

Classification of Grant Aid

The financial source for Japan's grant aid is the government's General Account Budget. In the government's budget for FY1997, a sum of ¥220.2 billion was appropriated for grant aid under the Budget for Economic Development Assistance and ¥43.3 billion under the Budget for Food-Related Assistance, representing a total budget of ¥263.5 billion for grant aid.
Grant aid is roughly classified into the following six categories:
(1) General Grant Aid
(2) Grant Aid for Fisheries
(3) Grant Aid for Cultural Activities
(4) Emergency Grant Aid
(5) Food Aid
(6) Grant Aid for Increase of Food Production

(1) General Grant Aid
General Grant Aid is aimed at contributing to the social and economic development of developing countries. General Grant Aid plays a central role in Japan's grant program and is comprised of: Grant Aid for General Projects, which is provided for the support of projects in areas such as basic human needs (agriculture, medical and health care, public welfare and the environment), human resource development (education, research, training), and basic economic infrastructure, including regional roads; Grant Aid for Debt Relief, Non-Project Grant Aid for Structural Adjustment Support, and Grant Assistance for Grassroots Projects.
Examples of Grant Aid for General Projects include the provision of funds necessary for the construction of facilities such as schools and hospitals, and for the purchase of medical equipment.

(2) Grant Aid for Fisheries
Grant Aid for Fisheries is intended to contribute to the development of fishing industries in developing countries.
Specifically, grants provide funds for fisheries-related projects, such as the construction of training and research centers, the building of training vessels, and the purchase of equipment.

(3) Grant Aid for Cultural Activities
This form of grant aid aims to provide funds needed to preserve and utilize cultural assets and relics, to hold cultural events, and to purchase equipment and materials to be used in promoting education and research in developing countries.

(4) Emergency Grant Aid
Under this category, Grant Aid for Disaster Relief is extended urgently to assist victims of natural disasters or refugees through the government of the affected country or through relevant international organizations for humanitarian assistance. Emergency Grant Aid also includes Assistance for Democratization, to support developing countries in conducting elections, and Support for Reconstruction and Development, to support the post-conflict rebuilding processes of developing countries.

(5) Food Aid
Food Aid is extended to developing countries facing imminent food shortages. Japan provides Food Aid in accordance with the Food Aid Convention of 1995.
Japan's Food Aid provides funds to developing countries for the purchase of staple foods such as rice, wheat and maize.

(6) Grant Aid for Increase of Food Production
This Grant Aid is designed to assist developing country efforts to increase food production and to alleviate chronic food shortages. Specifically, this type of aid provides the funds needed to purchase fertilizers, agrochemicals, agricultural machinery, and other agricultural supplies.

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