The interdependence of the global community is increasing more and more, and globalization is progressing rapidly in the economic sphere. Developing countries in this context face a variety of problems and require support through ODA.

(1) Asia, especially East Asia, has undergone rapid globalization and experienced increase in its private sectors' activities. Though growth and prosperity have increased rapidly, the region still has a number of tasks remaining on its agenda:

• Improving the economic infrastructure: Considering Asia's rapid economic growth, the World Bank estimates that in the decade from 1995 to 2004, infrastructure construction in East Asia and the Pacific will generate a demand for capital ranging between 1.3 and 1.5 trillion dollars.
• Reducing distortions in a development process: The widening gaps in a country concerning income distribution, industrial pollution and rapid urbanization are aggravating environmental destruction.

Southwest Asia has a poverty-stricken population of over 500 million. Least developed countries, such as Cambodia and Laos - to cite only examples in Indochina - lag drastically behind other countries in terms of poverty, elementary education, medical care, and other basic human needs. In Cambodia, for example, the infant mortality rate (deaths before the age of 5 years per 1,000 births) is 158 (compared to 6 in Singapore). (Note 1)

(2) Sub-Saharan Africa (hereinafter simply "Africa") is lagging ever further behind other developing countries economically. This region's poverty-stricken population is growing not only in absolute, but also in relative terms: of the total population of 590 million, 266 million (45 %) are now victims of poverty. (Note 2)

In education, the situation remains unsatisfactory: 72% (Note 3) of Africans start elementary school, and 67% of adult males and 48% of adult females are literate (Note 4). In medical care and sanitation, only 51% of Africans have access to safe drinking water and 44% have access to adequate sanitary facilities. The infant mortality rate (before the age of 5) is 175 per 1,000 - almost 21 times the figure in advanced industrial nations (8 per 1,000). (Note 5)

Japan's budget deficit is at the worst level of all major advanced industrial nations today. To reduce the government's expenditures and rebuild its finances, the Hashimoto Cabinet adopted "On the Promotion of Fiscal Structural Reform," on June 3, 1997. It stipulates that the ODA budget will be decided based on the following points:

(1) The ODA budget will be decreased each fiscal year during the intensive reform period through a shift in emphasis from quantity to quality. In particular, the FY 1998 ODA budget will not exceed 90% of the FY 1997 budget.

(2) New medium-term target which entails quantitative targets will not be set.

(3) Aid will be implemented with an emphasis on preliminary consultations with the recipient countries and fully considering the importance of social development, including support for health, medical care, education and the improved status of women, in an effort to ensure aid is truly appreciated by the peoples of the recipient countries. In addition, an evaluation system will be set in place; cooperation with NGOs and other private-sectors will be promoted; and the disclosure of information will be enforced.

At a press conference on June 3, Prime Minister Ryutaro Hashimoto said, "In making these cutbackes we will ensure the smooth execution of our current ODA commitments by improving the quality of ODA, prioritizing and improving efficiency in budget allocations and by utilizing financial resources from the private sector. But it is obvious that Japan will continue to strive for efficient implementation of its ODA and will do everything possible to avoid undermining its spirit of international contribution." Since ODA plays a major role for Japan and the international community, it is vital for Japan to strive to implement ODA efficiently, improving its quality, and modulating its allocations in order to minimize budget reduction's negative impacts and maximize ODA's benefits.