New Terms and Conditions of Yen Loans
March 30, 2007
Government of Japan
The Government of Japan announces new terms and conditions of Yen Loans. These improvements will become effective as from April 1, 2007 (1.(1) and (5) below will become effective as from October 1, 2007).
1. Revision of Interest Rates, Charges and others
To promote the active utilization of Yen Loans and smooth implementation of Yen Loan projects, following improvements will be adopted. For the charts on new terms and conditions, refer to the Attachments I (effective as from April 1 to September 30, 2007) [PDF]
and II (effective as from October 1, 2007) [PDF].
(1) To reduce the financial burden of the recipients, interest rates of "General Terms" except for Low-Income LDCs and Upper-Middle-Income Countries will decrease by 0.1% point. And interest rates of "Preferential Terms" for LDCs and Low-Income Countries and "Special Terms for Economic Partnership (STEP)" will decrease by 0.2 % point. "Preferential Terms" for Lower-Middle-Income/Middle-Income Countries will decrease by 0.1% point.
(2) Interest rates for Upper-Middle-Income Countries will decrease by 0.6 % point.
(3) To strengthen the assistance for soft components so as to improve the quality and to accelerate Yen Loan projects, an interest rate for consulting services will be minimal (0.01%). In this case, repayment and grace periods and conditions for procurement will be the same as those for main components.
(4) To strengthen the assistance for efforts to recover from emergent disasters, interest rates for projects for such recoveries will be minimal (0.01%), and repayment and grace periods will be 40 years and 10 years, respectively.
(5) Commitment Charges by 0.1% per annum will be imposed for undisbursed amounts of Loans after effectuation. At the same time, charges for the extension of disbursement periods (0.2% of undisbursed amount multiplied by the number of years to extend) and charges for disbursement by JBIC (0.1%) will be abolished. (Low Income-LDCs will be exempted from such Commitment Charges.)
(6) A ceiling ratio of the coverage of a Yen Loan over total costs of a project has until now been 85% for LDCs/Low-Income Countries/STEP, 75% for Lower-Middle-Income/Middle-Income Countries and 60% for Upper-Middle-Income Countries. To facilitate smooth implementation of Yen Loan projects, this ratio will increase to 100% for LDCs/Low-Income Countries/STEP and 85% for Lower-Middle-Income/Middle-Income/Upper-Middle-Income Countries. Furthermore, where it is difficult for a recipient to allocate sufficient local counterpart funds owing to exceptional circumstances such as recovery from a conflict or an extensive disaster, the ratio may increase to 100% regardless of income levels of recipients. In all cases, portions that have been deemed ineligible to be financed by Yen Loans will remain the same.
2. Expansion of Sectors and Fields of Assistance for Upper-Middle-Income Countries
Yen Loans to Upper-Middle-Income Countries have until now been limited in-principle to Environment, Human Resource Development, Anti-Seismic Measures and Measures to Reduce Disparities in Low-Income Regions. In order to meet various needs of development in Upper-Middle-Income Countries, "Anti-Seismic Measures" will be expanded to "Disaster Protection and Recovery Measures" and "Measures to Reduce Disparities" will be expanded to include social infrastructure development in urban areas to improve the living standards of the urban poor, etc.
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