Japan to restart loans to developing countries via JICA

I / Tokyo June 3, 2009, 12:34 IST

A government panel has given it's approval to the proposal to allow the Japan International Cooperation Agency (JICA) to make investments and provide loans to developing countries again, reversing a 2001 decision to strip JICA of such power, officials said.

The Overseas Economic Cooperation Council, spearheaded by PM Taro Aso, gave its nod to the proposal to facilitate infrastructure and resources development in developing countries by funneling assistance via JICA to Japanese companies that engage in businesses in such nations.

The Aso government will incorporate the decision into a package of key policy guidelines it will draw up and announce in late June, they said.

More specifically, govt envisions having JICA invest in overseas projects to build water purification plants with the involvement of Japanese companies, while helping Japanese firms secure concessions in foreign coal mines, they said.

JICA earlier used to provide loans and investments for projects that had a high risk of the money being lost but after the Japanese government witnessed a string of cases where JICA incurred losses, it stripped it of the powers to provide credit and make such investments as part of a program to reform government-backed corporations.

The Finance Ministry, the Foreign Ministry, the Economy, Trade and Industry Ministry and others will devise a mechanism to keep JICA from incurring large losses by analysing past cases of its investment and loan blunders.