National budget constraints have forced leading donor nations like the us to cut assistance to developing countries down to almost 20 per cent in 1993-94. But Japan, the world's largest donor, has not followed suit. It has retained its overseas development assistance (oda) budget of us $11.3 billion, 1/5th of the total aid disbursed by industrialised nations last year.

According to a report by the Organisation for Economic Cooperation and Development, aid disbursements fell to US $55.9 billion from US $60.8 billion in 1992. Japan's reluctance to reduce its aid contribution arises from its apprehensions that such a move would only draw more condemnation from countries already worried by its huge trade surplus.

The cuts in us development assistance are expected to boost Japan's reputation in a world where American policies have usually influenced aid programmes, and make Japan's call for a more planned economy popular among the developing nations. Besides, the importance of loans in aid disbursement will be highlighted as well; unlike other donors which give aid grants, most Japanese assistance comes as loans. The Japanese government has hinted at plans to reduce interest rates on new yen-dominated loans.(ips)