The BBC is reporting that Japan has offered to write off a $200million debt owed to it by the Nepalese government. The loan was made 20 years ago and had yet to be paid off.
This development shows a shift in Japan’s policy regarding international debt from the position four years ago when Jubilee 2000 campaigners gathered outside the Japanese embassy in London every Tuesday morning to petition the then-president of the G8 to raise debt’s profile on the G8 agenda for their annual summit in Okinawa. That campaigning had little immediate fruit (but the embassy staff enjoyed the attention each week) and Japan was at the time alleged to be threatening countries with cuts in development aid should they apply for debt cancellation.
Now Japan is cancelling a key loan to one of its key debtors. A debtor, in fact, that is not included in the list of 37 countries included in the HIPC program. (To be included in HIPC countries must have a 150% debt:GDP ratio. It is worth noting that the number of countries eligible has increased since HIPC launched). There are a number of countries outside HIPC that desparately need debt relief, I’m holding out hope that this is a sign that the consensus on terms-for-inclusion is cracking.