(1) Bangladesh's Position in Japan's ODA

Japan is providing assistance to Bangladesh, taking into account the following factors.

Bangladesh is the sixth largest recipient of Japanese bilateral aid (based on cumulative net disbursements up to 1998). Japan was the largest provider of bilateral aid to Bangladesh in 1997.

(2) Priority Areas for Japan's ODA

Based on studies and research concerning development conditions and tasks in Bangladesh and its development plans, as well as policy dialogues between Japan and Bangladesh, including the High-Level Mission on Economic and Technical Cooperation sent to Bangladesh in April 1990 and subsequent policy dialogues, Japan has given priority to assistance in the following areas.

As related tasks cutting across these four priority areas, Japan will also strengthen its efforts to address environmental issues, human resources development and institutional building.

(3) Matters for Consideration

• Bangladesh must step up its self-help efforts, including efforts to improve its capacity to absorb aid by strengthening aid implementation systems.
• There is room for greater utilization of Japanese grant aid for debt relief and collateral funds.
• Consideration should be given to greater use of grant aid and to the repayment status of yen loan debts, which have not been covered by grant aid for debt relief since 1998.

(1) Major Economic Indicators

(2) Current Situation

Agriculture is the major industry in Bangladesh, which is very susceptible to weather and fluctuations, and it is not self-sufficient in food. The country depends on foreign aid for more than 50% of its annual development plan budget (ADP). The Hasina administration is moving ahead with economic reforms while it is working to restore the country's production capacity, which was slowed by a general strike, to attract foreign investment and control inflation. For two months from July 1998, Bangladesh was devastated by what was said to be the worst flood damage of the century (amounting to 10% of the country's GDP), and it is believed that the country's 1998-99 GDP growth rate will be only in the 3-4% range. Following this, the mid-term tasks of the Bangladesh government will be to restore infrastructure and increase food production.

(3) Tasks to Be Addressed

• Eliminating the budget deficit and freeing the country from its dependence on foreign aid
• Boosting agricultural productivity to raise the food self-sufficiency rate and diversify agricultural production
• Implementing measures to further alleviate poverty and control the country's high population growth (which averaged 1.75% annually in 1996/97)
• Promoting private investment
• Promoting privatization of state-owned enterprises, trade liberalization, financial reforms, other structural adjustment measures and cultivating export industries
• Maximizing administrative efficiency and simplifying procedures

(1) Japanese Assistance

(2) Assistance from DAC Countries

(3) ODA from International Organizations

(1) India's Position in Japan's ODA

Japan provides assistance to India, taking into account the following factors.

However, in May 1998, India conducted underground nuclear tests. Japan views this action with grave concern and has responded by taking a series of measures, strongly urging India to call off its testing and development of nuclear weapons and suspending all new grant aid (with the exception of aid of an emergency and humanitarian character and grant assistance for grassroots projects) and new yen loans, in accordance with Japan's ODA Charter.

India is the fifth largest recipient of Japan's bilateral aid (based on cumulative net disbursements up to 1998).

(2) Priority Areas for Japan's ODA

On the basis of studies and research concerning development conditions and tasks in India and its development plans, as well as policy dialogues between Japan and India, including the High-Level Mission on Economic and Technical Cooperation sent to India in March 1995 and subsequent policy dialogues, Japan has given priority to assistance in the areas described below.

(3) Matters for Consideration

• India has a need for greater efficiency in implementing assistance, through an improved capacity to absorb aid, including stronger systems for implementation, and simplification of administrative procedures.
• As a large segment of India's population lives in poverty, it is therefore necessary to increase and improve cooperation in basic human needs (BHN).

(4) The Situation Regarding the ODA Charter

Based on international and domestic concern which was mounting over the possibility that India was developing a nuclear capability, Japan held bilateral consultations with India on nuclear non-proliferation and brought the issue up at assistance policy talks. Additionally, a letter was sent from the Japanese prime minister to Prime Minister Vajpayee soon after the formation of the latter's cabinet in March 1998 that urged India to exercise self-restraint. On these occasions, Japan also expressed its concerns regarding India's policy on nuclear weapons as they apply to the principles of the ODA Charter, and continued to encourage India to sign both the Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty.

However, because India carried out underground nuclear tests in May 1998, Japan called on India to immediately cease nuclear weapons tests and promptly stop its development of nuclear weapons and sign both the Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty; Japan also suspended all new grant aid (with the exception of aid of an emergency and humanitarian character and grant assistance for grassroots projects) and stopped all new yen loans. Japan also announced it would adopt a cautious attitude toward multilateral development banks' loans to India.

In September 1998, Prime Minister Vajpayee indicated to the United Nations General Assembly that it would consider signing the Comprehensive Test Ban Treaty (CTBT). In February 1999, India announced, together with Pakistan, the Lahore Declaration, which was the result of high-level talks between the two countries. The declaration promoted a reduction in tensions and the building of trust. In April 1999, India conducted mid-range ballistic missile tests. At vice ministerial talks with India, Japan strongly requested that India sign and ratify the CTBT and tackle the issue of nuclear non-proliferation; Japan also strongly urged India to exercise self-restraint on the issue of missile testing.

(1) Major Economic Indicators

(2) Current Situation

Through structural reforms, including economic liberalization and deregulation, India has maintained a favorable economic performance. From 1994 to 1996, India has achieved an economic growth rate exceeding 7%, but the economic growth in 1997-98 was in the 5% range. India continues to deal with issues such as budget deficits, tax reform and sluggish reports. In its 1999 budget, India announced plans to reduce its budget deficit and place priority on tax system reform through the simplification of indirect taxes to increase tax revenue.

(3) Tasks to Be Addressed

• India's chronic budget deficits must be improved by promoting tax reform and the quality of annual expenditures and by ending subsidies in nonessential areas.
• Deregulation of restrictions on prices, distribution and investment, and abolition of restrictions on financial organizations.
• Promotion of exports (reform of export procedures, abolition of limits and controls on exports, the building of electricity, transport and communications infrastructure, tariff cuts, and liberalization in trade of agricultural produce.
• Steps must be taken to create an attractive environment for investment (simplify approval procedures and improve the economic infrastructure).
• Implementation of anti-poverty measures (providing water and sewage lines to the poorest areas and increasing public hygiene).
• Withdrawal of the government from sectors where the private sector can work effectively.
• Efforts must be made to develop human resources, including the dissemination of primary education and the fostering of technical and managerial personnel.

(1) Japanese Assistance

(2) Assistance from DAC Countries

(3) ODA from International Organizations

(1) Nepal's Position in Japan's ODA

Japan provides assistance to Nepal, taking into account the following factors.

Nepal is the 16th largest recipient of Japan's bilateral aid (based on cumulative aid net disbursements up to 1998). In addition, Japan was the largest provider of bilateral aid to Nepal in 1997.

(2) Priority Areas for Japan's ODA

On the basis of studies and research concerning development conditions and tasks and development plans in Nepal, as well as policy dialogues between Japan and Nepal, including the High-Level Mission on Economic and Technical Cooperation sent to Nepal in November 1992 and subsequent policy dialogues, Japan has given priority to assistance in the following areas.

(3) Matters for Consideration

• Nepal has a limited capacity to absorb assistance, including its capacity to bear local costs. Thus, careful examination is necessary prior to the adoption of an aid project by thoroughly studying the country's ability to bear the social and financial costs involved.
• There is also a need to assist Nepalese agencies in expediting their aid procedures.

(1) Major Economic Indicators

(2) Current Situation

Nepal is largely dependent on agriculture, which accounts for approximately 40% of the country's GNP and employs 80% of its labor force. In the 1994 lower house elections, no party was able to form a majority government, although the succession of short-lived cabinets in the subsequent years have continued with basic emphasis on policies for eradicating poverty and promoting rural development while introducing foreign capital and liberalizing the economy. In 1997, the Agricultural Prospect Plan (APP) was initiated, which will promote land reform, the modernization of agricultural equipment and the development of irrigation.

(3) Tasks to Be Addressed

• Reducing the budget deficit and increasing tax collection capacity and revenues in order to eliminate the country's aid-dependent structure
• Promoting economic liberalization and foreign investment and improving the trade balance
• Promoting land reform, modernization of agriculture and improving agricultural productivity, with an emphasis on eradicating poverty and rural development
• Resolving environmental degradation caused by population growth, deforestation, and soil erosion and preventing natural disasters
• Promoting lagging economic infrastructure development

(1) Japanese Assistance

(2) Assistance from DAC Countries

(3) ODA from International Organizations