Global Policy Forum

Tokyo - Japan's government on Monday announced it would cancel all $ 1.3 billion in outstanding debts owed by the world's 40 poorest countries. Japan will raise its waiver for official loans to 100 percent from over 90 percent promised earlier, Chief Cabinet Secretary Mikio Aoki said. The announcement covered all Japan's official loans to the poorest nations, except for those given as official development assistance (ODA) which had already been cancelled.

The 40 heavily indebted poor countries, chiefly in sub-Saharan Africa, owe about 140 billion yen ($1.3 billion) in non-ODA loans to Japan, said an official in the overseas aid division of Japan's foreign ministry. Japan's decision followed similar gestures from the United States, Britain, Canada and Italy.

Japan was setting an example as host of July's Group of Eight summit, grouping leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, said Aoki. Japan will host the G8 summit in the southern island of Okinawa from July 21 to 23. "Various development issues, including reduction of poverty, are expected to be discussed during this year's summit," the Chief Cabinet Secretary told reporters.

"And Japan, as the host, is ready to make utmost efforts through its leadership." The Group of Seven nations -- the G8 minus Russia -- had agreed at a summit in Cologne last June on an expanded, accelerated initiative to provide Third World debt relief. "Regarding debt issues, we have decided to expand the non-ODA reduction rate from 90 percent to 100 percent as smoothly putting the Cologne summit agreement into force is an urgent task," said Aoki. Non-ODA loans comprise trade insurance and loans extended by state bodies such as export-import banks.

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