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Japan eyes 20% cut in foreign aid to fund quake relief

(Agencies)
Updated: 2011-04-07 09:51

TOKYO -- Japan, the world's No 5 donor, is considering cutting foreign aid by 20 percent this fiscal year to help fund its extra budget for disaster relief after last month's massive quake and tsunami, media reported on Thursday.  

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The government is unlikely to issue new debt to fund the initial extra budget of more than $35 billion for disaster relief, domestic media reported this week, in a sign the authorities are wary of alarming bond investors by adding too much to Japan's already huge debt pile.      

For the current fiscal year to next March, Japan has set aside 572.7 billion yen ($6.7 billion) for official development assistance (ODA). Now, the ruling Democratic Party and the government are considering cutting that by 20 percent to help fund the extra budget, the Yomiuri newspaper reported.  

Japan, the world's No1 donor in the 1990s, has been cutting official development assistance in recent years as Tokyo focuses on tackling a mountain of public debt that is nearly twice the size of its $5 trillion economy.  

The more than 3 trillion yen ($35 billion) in the supplemental budget will pay for repairing roads, ports and schools, as well as helping those in quake-hit regions in Japan's northeast find new jobs, the Asahi newspaper reported on Wednesday.    

($1 = 85.475 Japanese Yen)