LOC17:26
14:26 GMT
TOKYO, July 17 (KUNA) -- Tokyo is moving to restart lending to Iraq through
the government-affiliated Japan Bank for International Cooperation (JBIC) to
promote Japanese-led infrastructure and resources projects after a 26-year
hiatus, a top-selling business daily here reported Tuesday.
This would mark a step beyond yen loans, whose purpose is economic aid, to
policy lending for projects involving private-sector companies, the Nikkei
Shimbun said.
The Japanese and Iraqi governments will agree as early as September on an
arrangement that would tap Iraq's oil revenues for repayment on JBIC loans
that fall into arrears, the newspaper said. It will mark the first time for
Japan to use such a scheme.
Japan's policy bank's last loan to Iraq was made in 1986. This time, Iraq
is poised to agree to give JBIC loans a priority claim on oil revenues should
repayment falter, the report said.
More than merely charging higher interest rates, this arrangement provides
the bank greater certainty in extending long-term credit.
Japan has never before had a deal to back loans with oil revenues,
according to the Ministry of Economy, Trade and Industry.
Stronger ties with Iraq , which sits on the world's fourth-largest crude
oil reserves, could help Japan procure crude oil at a time when Western
sanctions are squeezing Iran's petroleum trade.
The JBIC loans are expected to be conditional on the involvement of
Japanese companies. Last November, Japan agreed to provide economic-aid yen
loans for Iraqi projects such as repairing oil refineries and building
communications networks.
JBIC sees large-scale infrastructure projects backed by Japanese financing
as a way to bring more Japanese firms to Iraq, anticipating deals worth JPY
100-200 billion (USD 1.3-2.5 billion) each, such as building hospitals and
oil- and power-related infrastructure, the report said.
Japan ranked third by the value of Middle Eastern infrastructure orders in
2002, but by 2010, it had fallen to sixth, with South Korea rising to second
and China to third. Tokyo sees restarting JBIC loans to Iraq as a way to
reverse this decline. (end)
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