Japan waives US $115-million debt

The government of Japan announced on Tuesday that it had waived 1.2 billion yen (US $11 million) worth of debt that Tanzania had incurred with the Japan Bank for International Cooperation for up to 20 years. The head of economic cooperation at the Japanese embassy in Dar es Salaam, Tatsuo Hirayama, told IRIN on Wednesday that whereas Japan used to provide debt relief grants, Tokyo decided at the end of 2002 to cancel debts for all the Highly Indebted Poor Countries. The cancellation of Tanzania’s debts only referred to Overseas Development Assistance loans, accumulated over the last 20 years, but Hirayama said that discussions were "on going" on the cancellation of Tanzania’s commercial loans. Analysts welcome the move, saying that the money that would have been used to pay the debts could now be used for the country’s second Poverty Reduction Strategy (PRS), aimed at improving access to services for the poor. Flora Musonda, an economist at the Economic and Social Research Foundation, an independent, not-for-profit institution that carries out research and policy analysis in Tanzania, said if used correctly, the money would be of great benefit to the poor. "The PRS is just a few years old, so it is difficult to know how effective it has been," she told IRIN on Wednesday. "A review is being carried out but we can say there has been some good and other areas not so good." She added: "The next phase is important as it targets rural areas. But the issue is that, in some places, the basic infrastructure is so poor, or is just not there, that the priority is to install it in the first place." "So poverty will remain for some time before people begin to feel the difference," she said. Tanzania began preparing its PRS, which examines the country’s macroeconomic, structural and social policies to promote growth and reduce poverty, in preparation for qualifying for Highly Indebted Poor Country status, which it achieved in late 2001. The PRS was prepared by the government, through a participatory process involving civil society and development partners, and Tanzania’s first phase focused on securing budgetary support for education, health and infrastructure development. The second PRS phase targets the poor and aims to increase accessibility to services in the rural areas, where 85 percent of Tanzania’s population lives.