Japanese Concessional ODA Loans

Japan International Cooperation Agency (JICA) is one of the major providers of Japan’s bilateral development assistance in the form of technical cooperation, ODA loans and grant aid.   The Ministry of Foreign Affairs of Japan is the other major actor in this field.

JICA has concessional terms for developing countries, based on the LDC category and the World Bank income groups.  There are four groups of developing countries (as of 1 April 2017):

  1. LDCs with per-capita income less than $1,025;
  2. Non-LDCs with per-capita income less than $1,025;
  3. LDCs with per-capita income equal to or greater than $1,025, and;
  4. Non-LDCs with per-capita income equal to or greater than $1,025.

Countries in group (1) enjoy the most favourable terms, with interest rate at 0.01 per cent and a 40-year repayment period (including 10-year grace period), irrespective of sectors and fields.

Countries in group (2) receive loan conditions less favourable than those for countries in group (1), but equally or more favourable terms than those for countries in groups (3) and (4), depending on sectors and fields.

Countries in groups (3) and (4) are eligible for concessional terms, but those in group (3) receive terms that are equally or more favourable than those for countries in groups (4), depending on sectors or fields where resources are invested.

Table 1 below shows examples of concessional terms representative for each group.

Table 1.  JICA concessional terms for LDCs and other developing countries a/
 

Sector/field

Fixed annual interest rate (%) b/

Repayment period (years)

Grace period (years)

Group (1) All

0.01

40

10

Group (2) General

0.70

30

10

Priority areas c/

0.60

30

10

Group (3) General

0.70

30

10

Priority areas c/

0.60

30

10

Group (4) d/ General

1.20

30

10

Priority areas c/

1.00

30

10

Source: CDP Secretariat, based on JICA (2017).

Notes: a/ Table shows representative untied loans with fixed interest rates and typical repayment and grace periods.  There are more than 60 different concessional terms available for developing countries to choose from.  Options allow recipients to select fixed or variable interest rates, lower annual interest rates with shorter repayment or grace periods, and tied or untied loans.  Countries in group (1) have no option.

            b/ Options for variable interest rates are available for countries in group (4).

           c/ Sectors or fields related to environment- and climate-change-related fields and the health and education sectors.  There are also different terms available for disaster-related reconstruction or rehabilitation projects.

           d/ Concessional terms vary among countries in different income groups.


Utilization by LDCs:

Available smooth transition procedures:

For Low-Income LDCs, the term and condition of 0.01% interest rate and 40-year repayment period for the Japanese ODA Loans including 10-year grace period are applied, irrespective of sectors and fields. The three-year transition period will be granted to recipient countries that will move from the category of Low-Income LDCs, and, during the period, the terms and conditions for Low-Income LDCs will be applied to the projects of the countries. The Low-Income LDC list as of April 2017 could be found here.

Resources:

  1. Japan International Cooperation Agency (JICA)
  2. JICA: Terms and Conditions of Japanese ODA Loans