TOKYO -- Japan will likely provide less official development assistance in fiscal 2015 than in fiscal 2014 due to the weakening yen, raising concerns that the country may lose some influence in the international arena.
Many are especially worried over grant aid and technical cooperation. Japan would need to spend about 20 billion yen more ($164 million) for these programs to provide the same volume of aid seen in fiscal 2014, but the Foreign Ministry is unlikely to be able to secure much more in next fiscal year's budget than the 423 billion yen allocated at the beginning of this fiscal year.
Japan has the ability to expand low-interest yen loans, thanks to increased repayments from China and Southeast Asia. But due to high demand from developing countries, grants are even "more powerful as a diplomatic tool," noted one Foreign Ministry source.
Diplomatic missions, which support ODA programs, will also need to take further steps to juggle wages, bills and other expenses within a tighter budget due to the softer yen.