Official Development Assistance (ODA)
3. ODA Country Policy toward Major Recipients
Latin America and the Caribbean
Japan's ODA in Brazil
1. Basic Policies
(1) Brazil's Position in Japan's ODA
Japan is providing assistance to Brazil, taking into account the following factors.
| 1) | Brazil maintains traditionally friendly relations with Japan, especially as the majority of Japanese expatriates and persons of Japanese descent throughout Latin America live in Brazil (approximately 1.4 million people). |
| 2) | Brazil plays an important political and economic role in Latin America. |
| 3) | Brazil has close economic ties with Japan. |
| 4) | Global measures to protect the natural environment are urgently needed and in this context attention has focused on the conservation of tropical forests in the Amazon region. |
Brazil is the 18th largest recipient of Japanese bilateral aid (based on cumulative net disbursements up to 1998) and the second largest recipient of Japanese bilateral aid in Central and South America. Japan was the largest provider of bilateral aid to Brazil in 1997.
(2) Priority Areas for Japan's ODA
Based on studies and research concerning development conditions and tasks in Brazil, and its development plans, as well as policy dialogues between Japan and Brazil, including the High-Level Mission on Economic and Technical Cooperation sent to Brazil in March 1992 and subsequent policy dialogues, Japan has given priority to assistance in the following areas. Japan has also stated a policy of supporting economic reform efforts and South-South cooperation during mutual visits by the heads of states of the two countries in 1996. In bilateral talks in March 1998, it was agreed that, in order to rectify regional and income disparities and alleviate poverty, the emphasis in Japanese assistance will be placed on development of the northern and northeastern parts of Brazil, which remain relatively underdeveloped.
| 1) | Environment Brazil has environmental problems with global-scale repercussions requiring international countermeasure and continued assistance; its problems include the destruction of forests and loss of wildlife species due to the development of farm and pasture land in the Amazon region, the desertification of the northeast part of the country, and air and water pollution and waste treatment problems. Assistance should include the dispatch of experts, technology transfer for development studies and ODA loans for the implementation of environmental projects. |
| 2) | Industry Japan will provide assistance for the transfer of Japanese know-how in industrial technology, quality control and productivity enhancement for the modernization of Brazilian industry and the strengthening of international competitiveness. |
| 3) | Agriculture The agricultural sector produces no more than about 10% of the country's GDP but it employs about 30% of the working population and accounts for about 30% of the country's exports. It is important for Japan to provide assistance in accordance with local conditions and technological levels. Providing assistance in the agriculture sector for the rectification of regional and income disparities, for the transfer and development of agricultural technology to boost productivity through selective breeding and dissemination of irrigation technology, for sustainable agricultural development compatible with the environment, and for the agricultural development of the Cerrado Region, such as increased production of crops such as soybeans. (This region is semi-arid plain with highly acidic soil.) |
| 4) | Mitigation of regional and income disparities and poverty alleviation Cooperation must be provided to rectify regional and income disparities in order to ensure sustainable growth in Brazil into the future, including support for health and medical services and education. |
(3) Matters for Consideration
- Japan is providing assistance, primarily in the form of technical cooperation, to Brazil, where income levels are high. Japan also considers loan assistance for environmental projects based on consideration of the projects' maturity, necessity, and the state of Brazil's foreign debt.
- Japan emphasizes cooperation in environmental fields and extends ODA loans and project-type technical cooperation for sewage treatment, abatement of river pollution, development of alternative energy sources and other environmental projects.
2. The Current Economic Situation in Brazil and Tasks to Be Addressed
(1) Major Economic Indicators
| 1997 per capita GNP and GNP growth rates (1990-1997 average) |
Real GDP growth rate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $4,790; 1.9% (World Bank figures) |
|
(2) Current Situation
High inflation had persisted for many years in Brazil, but since the introduction of the New Real Plan in July 1994, the inflation rate has been dropping. Direct investment from abroad is steadily increasing thanks to Brazil's progress in opening up its economy. However, the Asian economic crisis and the Russian currency crisis rapidly depleted foreign reserves and, in November 1998, the IMF announced $41.5 billion in support measures. In January 1999, the governor of Minas Gerais declared a moratorium on his state's debt to the central government, thereby precipitating the country's move to a floating exchange system. In March of that same year, the IMF measures were revised, and the exchange rate has stabilized.
(3) Tasks to Be Addressed
- Rebuilding the country's finances with adjustment programs to reduce public expenditures and the deficit in the pension system
- Continuing to control inflation, and maintaining an equilibrium in the international balance of payments
- Promoting deregulation, including economic liberalization and the abolition of protectionist policies for domestic industries
- Taking measures to combat the rising unemployment rate (7.0% as of November 1998) caused in part by the rationalization in the financial and automotive industries
- Promoting conservation of the natural environment, including protection of tropical rain forests, and measures to combat pollution, including air pollution
- Strengthening the international competitiveness of industry, boosting agricultural productivity, and achieving sustainable agriculture
- Taking measures to alleviate poverty, rectify income and regional disparities, and promote employment
3. Development Programs
1996-1999 Multi-Year Program
This program is aimed at the achievement of enhanced social welfare and economic growth, while maintaining a fiscal balance, based on the economic stabilization achieved under the New Real Plan.
Major goals:
- Achieving a fiscal balance
- Achieving economic growth (GDP growth rate is forecast to be 4.0% in 1996, 4.5% in 1997, 5.0% in 1998, and 5.0% in 1999)
- Participating in the international economy (opening up the country's markets)
4. Aid Statistics
(1) Japanese Assistance
| Calendar Year | ODA Loans | Grant Aid | Technical Cooperation | Total | Rank of Total Contribution |
|---|---|---|---|---|---|
| 1998 | 52 | - | 55 | 106 | 12th |
| Cumulative through 1998 | 538 | 3 | 722 | 1,263 | 18th |
(2) Assistance from DAC Countries
| Total Bilateral Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 193 | Japan: 62 | Germany: 52 | France: 18 |
(3) ODA from International Organizations
| Total Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 296 | UNDP: 201 | IDB: 33 | UNICEF: 20 |
Japan's ODA in El Salvador
1. Basic Policies
(1) El Salvador's Position in Japan's ODA
Japan is providing assistance to El Salvador, taking into account the following factors.
| 1) | Stability in El Salvador and the rest of Central America is essential to peace and stability in Latin America. |
| 2) | The peace process in El Salvador has been proceeding smoothly since the conclusion of the civil war in January 1992 and the country has been making efforts to establish democracy and adopt a market-oriented economy. The country has considerable assistance needs. |
| 3) | Japanese economic assistance is highly acclaimed in El Salvador, which has historically viewed Japan in a positive light. In addition, El Salvador is a reliable partner in international forums, including the United Nations. |
| 4) | The country is moving forward with rebuilding efforts in the aftermath of the November 1998 Hurricane Mitch. |
Japanese assistance to El Salvador has expanded considerably since 1992 with the conclusion of the civil war. Japan is the second largest aid donor to El Salvador (as of 1998). El Salvador is the 51st largest recipient of Japanese bilateral aid (based on cumulative net disbursements up to 1998) and the 11th largest in Latin America.
(2) Priority Areas for Japan's ODA
On the basis of studies and research concerning development conditions and tasks in El Salvador and its development plans as well as policy dialogues between Japan and El Salvador, including the High-Level Mission on Economic and Technical Cooperation sent to El Salvador in December 1994 and subsequent policy dialogues, Japan has given priority to assistance in the following areas.
| 1) | Key fields in stimulating the production sector (transportation, agricultural production base, and energy) From the point of view of vitalizing El Salvador's production sector, which has considerable potential capacity and also recovering from the hurricane damage, assistance is needed for improving economic infrastructure in areas such as transport and transportation, agriculture, and energy, as well as for human resources development and technology transfer. |
| 2) | Social development (education and health and medical services) El Salvador has a small land area relative to its population and lacks natural resources. Accordingly, human resources development is essential. Expanding primary education and training teachers are matters of great urgency. Efforts must also be concentrated on the regional health and medical services sector, which serves the socially vulnerable and the poor. |
| 3) | Environment (water and sewage systems, and waste disposal) Cooperation for promoting the efficient use of water resources, the treatment of polluted water (which has become a serious problem throughout El Salvador) and industrial waste disposal in cities are important given that achieving both development and environmental goals are essential to sustainable development. |
| 4) | Support for democratization and economic stabilization Japan has provided direct support to El Salvador for democratization and economic stabilization. Japan will continue from here on to use grant assistance for grassroots projects, keeping in mind the importance of NGO activities, and to provide assistance through U.S.-Japan cooperation under the Common Agenda. |
(3) Matters for Consideration
- The emphasis in assistance to El Salvador has gradually been shifted from emergency relief to reconstruction assistance since the end of the civil war. Based on improvements in the average income due to economic development, the emphasis in economic assistance to El Salvador will be shifted to assistance in the form of ODA loans and technical cooperation.
- Given the extreme devastation of the economic and social infrastructure by the civil war and by Hurricane Mitch, assistance priorities in a variety of sectors must be examined while also coordinating with other donor countries.
- It is necessary to improve El Salvador's capacity to receive aid by strengthening aid implementation structures and other means.
2. The Current Economic Situation in El Salvador and Tasks to Be Addressed
(1) Major Economic Indicators
| 1997 per capita GNP and GNP growth rates (1990-1997 average) |
Real GDP growth rate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $1,810; 3.5% (World Bank figures) |
|
(2) Current Situation
The El Salvadorian government had begun promoting liberalization even before coming to a peace agreement with the opposition and succeeded in stimulating the economy. As a result, the country's macroeconomic performance is stable. El Salvador has been recording good economic growth thanks to increased post-war reconstruction demand and direct investment since the end of the civil war, and has managed to keep its inflation rate low (1.9% in 1997).
(3) Tasks to Be Addressed
- Maintaining favorable macroeconomic performance (controlling inflation, curbing the growing budget deficit, boosting the domestic savings rate, etc.)
- Rectifying income disparities, alleviating poverty and promoting regional development
- Promoting exports and industrial reorganization
- Promoting participation in the global economy and regional economic integration
- Harmonizing economic growth with environmental protection
- Further modernizing government institutions and the legal system
3. Development Programs
The Plan for Social and Economic Development (1994-1999)
Goals:
- Continuing El Salvador's efforts to stabilize its economy, moving ahead with structural reforms, further advancing structural reforms and creating employment opportunities
Major policies:
| 1) | Macroeconomic, monetary and fiscal policy Strengthening the country's domestic economy and liberalizing the economy, promoting exports, upgrading the system for attracting foreign investment, improving tax collection methods, further controlling fiscal expenditures, maintaining liquidity commensurate with the growth in production activities and stable prices, and boosting the financial sector's competitiveness and capabilities. |
| 2) | Social development Boosting the percentage of people who receive basic education (69.2% in 1993 to 79.1% in 1999), implementing measures to improve literacy rates in rural areas, measures for health and medical care for pregnant women and infants, improving the living environment in rural and urban areas, increasing the percentage of households served by water and sewage systems, and promoting small businesses. |
| 3) | Economic infrastructure Improving the quality and reliability of the electric power infrastructure, encouraging the private sector to participate in the telecommunications industry, upgrading transportation networks in and between cities, modernizing harbor facilities, promoting diversification of food production, and increasing agricultural productivity. |
4. Aid Statistics
(1) Japanese Assistance
| Calendar Year | ODA Loans | Grant Aid | Technical Cooperation | Total | Rank of Total Contribution |
|---|---|---|---|---|---|
| 1998 | 19 | 14 | 8 | 41 | 36th |
| Cumulative through 1998 | 105 | 173 | 42 | 320 | 51th |
(2) Assistance from DAC Countries
| Total Bilateral Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 234 | United States: 89 | Japan: 68 | Germany: 26 |
(3) ODA from International Organizations
| Total Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 60 | UNDP: 24 | *CEC: 18 | IDB: 13 |
Japan's ODA in Nicaragua
1. Basic Policies
(1) Nicaragua's Position in Japan's ODA
Japan is providing assistance to Nicaragua, taking into account the following factors.
| 1) | Stability in Nicaragua and the rest of Central America is essential to peace and stability in Latin America. |
| 2) | Nicaragua has been making efforts to establish democracy and adopt a market-oriented economy since the end of the civil war in April 1990. Also being one of the poorest countries in Latin America, Nicaragua is in great need of assistance. |
| 3) | Japanese economic assistance is highly appreciated in Nicaragua, which has historically been friendly to Japan. Nicaragua is moreover a reliable partner in such international fora as the United Nations. |
Japanese assistance to Nicaragua has expanded since the conclusion of the civil war in 1990. Japan is the largest aid donor to Nicaragua (as of 1997). Nicaragua is the 45th largest recipient of Japanese bilateral aid (based on cumulative net disbursements up to 1998) and the 8th largest recipient in Latin America.
(2) Priority Areas for Japan's ODA
On the basis of studies and research concerning development conditions, tasks, and plans in Nicaragua, as well as policy dialogues between Japan and Nicaragua, including the High-Level Mission on Economic and Technical Cooperation sent to Nicaragua in December 1994 and subsequent policy dialogues, Japan has given priority to assistance in the following areas.
| 1) | Social development and poverty alleviation In Nicaragua, where the groundwork for economic development has yet to be laid, it is important to provide assistance in the health and medical services, and education fields, and for the promotion of low-income housing plus agricultural and marine products, as the underpinnings for economic reform. |
| 2) | Social and economic infrastructure Nicaragua suffers from serious infrastructure inadequacies due to destruction during the civil war, an extended lack of proper maintenance and the damage wrought by natural disasters, as exemplified by Hurricane Mitch. It is important to provide assistance for infrastructure such as roads, bridges, ports, irrigation and energy. |
| 3) | Environment It is important to provide assistance for water supplies, for measures to deal with sewage and wastewater, and for waste disposal in metropolitan areas with high population growth in order to achieve sustainable growth. |
| 4) | Support for democratization and economic stabilization Japan has provided direct support to Nicaragua for democratization and economic stabilization over the years. Japan will continue from here on to use grant assistance for grassroots projects, keeping in mind the importance of NGO activities. |
(3) Matters for Consideration
- Assistance to Nicaragua, chiefly in the form of grant aid, has expanded considerably since the conclusion of the civil war. There is need for assistance in a variety of areas, including hurricane relief. Japan should examine where the greatest need for assistance is by examining a wide variety of areas and working in cooperation with other donor countries.
2. The Current Economic Situation in Nicaragua and Tasks to Be Addressed
(1) Major Economic Indicators
| 1997 per capita GNP and GNP growth rates (1990-1997 average) |
Real GDP growth rate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $410; 1.6% (World Bank figures) |
|
(2) Current Situation
The inflation rate in Nicaragua hit a peak of 33,600% in 1988 and 13,490% in 1990. With the implementation of fiscal and monetary reforms by the Chamorro government, the abolition of price controls and the success of structural adjustment policies that removed fixed exchange rates and trade restrictions, the inflation rate was brought down to just 7.2% in 1997. The economic growth rate has increased steadily in recent years; a 5.0% growth rate was achieved in 1997 (the highest since the end of the civil war in 1996) due to growth in the fishing, construction, mining and agricultural industries.
(3) Tasks to Be Addressed
- Promoting social development and poverty-alleviation measures and expanding job opportunities
- Overall upgrading of underdeveloped infrastructure
- Promoting environmental measures, including water supply and waste disposal measures
- Stabilizing the macroeconomy
3. Development Programs
Since the inauguration of the Aleman administration in January 1997, no new comprehensive development programs have been announced. The following summarizes the most recent Mid-Term Development Program. It is mentioned here for your reference, as there has been no apparent change in the country's basic development policy.
Mid-Term Development Program (1994-1997)
Goals:
- Achieving economic stability and promoting the transition to a market-oriented economy
- Strengthening the structural adjustment process, which is instrumental in achieving a more efficient and competitive economy
Major tasks:
- Creating conditions essential to private investment
- Increasing job opportunities in the production sector and raising the living standards of the poor
4. Aid Statistics
(1) Japanese Assistance
| Calendar Year | ODA Loans | Grant Aid | Technical Cooperation | Total | Rank of Total Contribution |
|---|---|---|---|---|---|
| 1998 | - | 20 | 9 | 29 | 48th |
| Cumulative through 1998 | 110 | 242 | 57 | 408 | 45th |
(2) Assistance from DAC Countries
| Total Bilateral Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 258 | Japan: 49 | United States: 41 | Germany: 29 |
(3) ODA from International Organizations
| Total Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 162 | IDB: 59 | IDA: 49 | *CEC: 30 |
Japan's ODA in Peru
1. Basic Policies
(1) Peru's Position in Japan's ODA
Japan provides assistance to Peru, taking into account the following factors.
| 1) | Japan has traditionally had friendly ties with Peru, where about 100,000 Japanese and Peruvians of Japanese descent live. |
| 2) | Peru, which has gained economic stability through economic structural adjustment policies in the 1990s under the Fujimori government, has a great need for development in order to achieve sustained economic growth and to improve the national standard of living. |
| 3) | Peru's development policy is demonstrating ownership over its economic and social development by advancing certain specific development targets; its policies are in accord with the orientation of the DAC's development partnership strategy, and Peru is in a suitable recipient of assistance for implementing the development partnership strategy. |
| 4) | It can be expected that Peru will strengthen its role in the Asia-Pacific region, as it joined APEC in 1998. |
Peru is the 17th largest recipient of Japanese bilateral aid (the largest in Central and Latin America) (based on cumulative net disbursements up to 1998). In recent years, the leaders of Peru and Japan have exchanged frequent visits, and bilateral relations are growing closer.
(2) Priority Areas for Japan's ODA
On the basis of studies and research concerning development conditions and tasks in Peru and its development plans, as well as policy dialogues between Japan and Peru, including the High-Level Mission on Economic and Technical Cooperation sent to Peru in February 1998, Japan is to give priority to assistance in the following areas.
| 1) | Poverty alleviation Helping Peru modernize its agricultural production infrastructure and methods is the important facet of aid to narrow income disparities between rural and urban areas and promote rural development. Japan will study the possibility of cooperation in the modernizing of agricultural production infrastructure through financial cooperation related to water supply and small-scale irrigation and through loans to small farmers. Japan will also continue its cooperation in the areas of improving infrastructure for basic human needs, focused on the building of water and sewage system and the cultivation of replacement crops for illegal coca as part of the U.S.-Japan Common Agenda. |
| 2) | Assistance for the social sector In response to the major gaps in primary school attendance rates and literacy between urban and rural areas and between men and women, Japanese ODA seeks to support the retraining and further skill enhancement of existing teachers and the improvement of teaching materials and school facilities. To reduce Peru's high rates of perinatal and infant mortality, Japanese ODA will stress maternal and child health care and family planning and cooperation toward the donation of equipment and supplies to health care and medical facilities and the training of medical personnel. |
| 3) | Economic infrastructure Japan is to actively cooperate in the construction of such economic infrastructure as transportation (roads, airports, ports), electricity, communications and broadcasting, etc., bearing in mind the needs of areas outside the capital. The consolidation and improvement of agriculture, forestry, and fisheries, the development of mining, which drives Peru's exports, and the development of oil, natural gas, and other forms of energy are important, and the development of tourism will be stressed as a new field. |
| 4) | Environmental conservation In December 1994, a Peruvian National Environment Council was established, which strengthened integrated environmental administration. Environmental conservation is indispensable to promoting sustainable development; based on the Initiatives for Sustainable Development (environmental assistance policy), Japan is to pursue aid centered around measures to combat global environmental problems such as air and water pollution, waste disposal, industrial and other causes of pollution and global warming. The consideration of cooperative measures to tackle damage caused El Niño phenomena in Peru is also necessary. |
(3) Matters for Consideration
- Aid staff have fallen victims to terrorism in Peru, as evidenced by the murder of Japanese aid workers in 1991 and the occupation of the Japanese ambassador's residence in 1996-1997. When aid workers are sent, maximum care must be taken to ensure their safety, and safety conditions should be periodically investigated.
- Given that the highest priority is assigned to anti-poverty measures in Peru, it is important to implement aid to complement Peru's own efforts effectively and efficiently.
- Considering the improvement in income levels arising from Peru's economic development, future assistance should focus gradually shifting cooperation to the form of loan aid.
- Rectification of Peru's border dispute with Ecuador has meant that support for development in the border area (previously not a possibility until recent years due to the conflict) can now be fully considered.
(4) The Situation Regarding the ODA Charter
The border dispute between Peru and Ecuador, which has continued since the 19th century and which caused a military conflagration in January 1991, ended when direct negotiations between President Fujimori of Peru and President Mahuad of Ecuador reached a peace agreement in October 1998. Events are taking a favorable turn, inasmuch as unnecessary military expenditure will be avoided, suggesting future growth.
2. The Current Economic Situation in Peru and Tasks to Be Addressed
(1) Major Economic Indicators
| 1997 per capita GNP and GNP growth rates (1990-1997 average) |
Real GDP growth rate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $2,610; 4.6% (World Bank figures) |
|
(2) Current Situation
Thanks to the promotion of economic structural adjustment policies oriented toward a free market economy, economic growth had been maintained in recent years and the trade deficit had shrunk. However, the effects of El Niño, the currency crises in Asia and Brazil and the drop in copper prices in the international market affected economic growth; in 1998 economic growth was only 0.7%, the lowest rate of growth since 1993 (Peru Statistical Agency figures) Conversely, the inflation rate was 6.0%, the lowest figure since the introduction of democratic government in 1980.
(3) Tasks to Be Addressed
- Reducing the current balance
- Improving the foreign debt situation
- Creating a favorable investment environment (response to such problems as the rigid labor market, high capital costs such as corporate taxes, and insufficient economic infrastructure)
- Improved export competitiveness (exports: goal of an average 10% increase until 2000)
- Responses to income distribution and poverty
- Job creation (support for small enterprises, promotion of agriculture, etc.)
3. Development Programs
Currently, there is no comprehensive development plan, and programs are formulated individually for each of a variety of fields. In June 1996, an Intensive Strategy for Anti-Poverty Programs 1996-2000 was announced, under which the poor population is to be reduced from 4.5 million in 1995 to half that figure in 2000.
4. Aid Statistics
(1) Japanese Assistance
| Calendar Year | ODA Loans | Grant Aid | Technical Cooperation | Total | Rank of Total Contribution |
|---|---|---|---|---|---|
| 1998 | 22 | 46 | 12 | 80 | 20th |
| Cumulative through 1998 | 725 | 353 | 281 | 1,359 | 17th |
(2) Assistance from DAC Countries
| Total Bilateral Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 364 | United States: 119 | Germany: 85 | Japan: 38 |
(3) ODA from International Organizations
| Total Aid | 1st | 2nd | 3rd |
|---|---|---|---|
| 124 | UNDP: 96 | *CEC: 22 | UNICEF: 7 |