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USAID and JBIC Collaboration in the Water Sector. Megumi MUTO Planning Division Development Assistance Strategy Department October 1, 2004. Outline of the Presentation. What is JBIC? What are JBIC ODA Loans? JBIC ODA for the Water Sector USAID-JBIC Water Collaboration in the Philippines.

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usaid and jbic collaboration in the water sector
USAID and JBICCollaboration in the Water Sector

Megumi MUTO

Planning Division

Development Assistance Strategy Department

October 1, 2004

outline of the presentation
Outline of the Presentation
  • What is JBIC?
  • What are JBIC ODA Loans?
  • JBIC ODA for the Water Sector
  • USAID-JBIC Water Collaboration

in the Philippines

what is jbic 1 result of merger between jexim oecf
What is JBIC? (1)Result of Merger between JEXIM & OECF
  • JBIC: Japan Bank for International Cooperation-Established on October 1, 1999, as a result of merger between JEXIM and OECF
  • Two Kinds of Operations:
    • International Financial Operations

(former JEXIM Operations)

    • Overseas Economic Cooperation Operations (former OECF Operations)
what is jbic 2 two types of operations
What is JBIC?(2)Two Types of Operations
  • International Financial Operations
    • Export Loans
    • Import Loans
    • Overseas Investment Loans
    • Untied Loans, Etc
  • Overseas Economic Cooperation Operations
    • Official Development Assistance (ODA) Loans to/through Sovereign Governments
    • Private Sector Investment Finance
what are jbic oda loans 1 priority areas for oda loans
What are JBIC ODA Loans?(1)Priority Areas for ODA Loans

1. Poverty Reduction

2. Infrastructure for Economic Growth

3. Anti-Pollution Measures

4. Global Issues

5. Human Resource Development

6. IT

7. Regional Development

what are jbic oda loans 2 characteristics of oda loans
What are JBIC ODA Loans?(2)Characteristics of ODA Loans
  • To support projects with low returns but high development significance
  • To finance large investments with less burden on the Japanese tax payers by leveraging
  • To transfer technology and knowledge with financial assistance

⇒ Revolving Fund for Development

what are jbic oda loans 3 types of oda loans


Support Loans

Project Loans

Structural Adjustment Loans (SAL)

Engineering Services (E/S) Loans

Non-project-type Loans

Project-type Loans

ODA Loans

Sector Program Loans

Sector Loans

Financial-Intermediary Loans (Two-Step Loans)

What are JBIC ODA Loans?(3)Types of ODA Loans



* Tapped for initial collaboration with USAID

what are jbic oda loans 4 volume of commitments
What are JBIC ODA Loans?(4)Volumeof Commitments

From FY 97 to 99, JBIC increased the commitments to assist restoration from Asian currency crisis. In FY2003, 89.9% of commitments were for Asia.

what is jbic s oda loan 5 terms and conditions i
What is JBIC’s ODA Loan?(5)Terms and Conditions (i)

<General Terms>

  • Interest rate:
    • 0.75% - 2.00% per annum based on Per Capita GNP of the borrowing country
  • Repayment period:
    • 30 - 15 years (including 10 - 5 years grace period)
what are oda loans 6 terms conditions ii
What are ODA Loans? (6)Terms & Conditions (ii)

<Preferential Terms>

(For Forest Conservation, PollutionPrevention, Human Resource Development, SMEs, among others)

  • Interest rate:
    • 0.50% - 1.20% per annum based on Per Capita GNP of the borrowing country
  • Repayment period:
    • 40 - 15 years (including 10 - 5 years grace period)
what are oda loans 7 terms conditions iii
What are ODA Loans? (7)Terms & Conditions (iii)
  • Interest rate:
    • 0.30% - 0.40% per annum based upon Per Capita GNP of the borrowing country
  • Repayment period:
    • 40 - 30 years (including 10 years grace period)

<Special Terms for Economic Partnership>


JBIC ODA Loans in the Water Sector (1)

Cumulative Commitments & Policy

  • Cumulativecommitments in the world

Water Supply : 80 billion Yen

130 projects

50 billion yen

50 projects

Sewerage :

  • Long time experience of assistance in Asian Countries (China, Thailand, Indonesia, Philippines, etc.)
  • Water supply and sewerage have beenconsidered as the priority sector in both poverty reduction and infrastructure development. JBIC will steadily increase its assistance in the water sector.

JBIC ODA Loans in the Water Sector (2)

Assistance In the Philippines

  • JBIC assistance to water sector in PH started in 1978. To date,

total commitment amount is 58.7 billion yen (29.4 billion

  • pesos). The total number of projects is fifteen (15). Ten(10)
  • projects are completed and five(5) are on-going.
  • JBIC-funded water supply facilities constructed and repaired
  • nationwide benefit 13 million people or 21% of Philippines
  • population.
  • The purposes and types of JBIC assistance in water sector in PH
  • >water supply and sanitation in rural areas
  • >water supply in provincial cities
  • >Water Supply in Metro Manila
  • >Water supply in other areas (Boracay Tourism area, Subic Bay
  • Free Port, Special Economic Zones, Cebu Reclamation Area)
  • Future strategy:

(1) Enhancement of water supply in poor areas and provincial LGUs

(2) Promotion of private financing

usaid jbic water collaboration 1
USAID-JBIC Water Collaboration (1)
  • Background History
  • Sep. 2002 Powell-Kawaguchi announcement of US-JAPAN Water Initiative at WSSD
  • Nov. 2002 First Discussion between USAID

& JBIC in Washington & Tokyo

  • Jan. 2003 JBIC joined USAID’s Workshop in Bangkok
  • Mar. 2003 Pilot Countries Approach Agreed for

Philippines, Indonesia & Jamaica

  • June 2003 Meeting between USAID’s Deputy Administrator

& JBIC’s Deputy Governor

  • July 2003 Evian Summit/G8 Water Action Plan
  • Oct. 2003 1st Outreach Monitoring Meeting in Washington
  • Mar. 2004 Consultation on Cofinancing Operation in PH
  • Apr. 2004 2nd Outreach Monitoring Meeting in Tokyo
usaid jbic water collaboration 2
USAID-JBIC Water Collaboration (2)
  • Basic Agreements between USAID & JBIC
  • To continue to discuss promotion of cofinancing in 3 pilot countries
  • USAID initiates the ideas/concepts of the Project
  • JBIC assists the Project formation
  • What to do in PH (start with existing mechanisms)
  • To promote project collaboration in the water sector

through frequent consultation and exchange of information on aid policies and operations

  • To study the feasibility of Pilot Municipal Water Loans and a Water Revolving Fund (WRF) in collaboration with PH side
  • To strengthen institutions/regulatory & policy frameworks
usaid jbic water collaboration 3 jbic projects a typical case
USAID-JBIC Water Collaboration (3)JBIC Projects - a typical case

ODA Loan finances 60-70% of the total project costs


ODA Loan

National Budget

Implementing Agency

(Local Government)

Private Financial Institution

Local Cost

Issuing Bond. etc.

・Borrower needs to be a government

・G-G basis sovereign loan

Usually 30-40% of the total cost

usaid jbic water collaboration 4 co financing model i local government public corporation
USAID-JBIC Water Collaboration (4)Co-Financing model I: Local Government /Public Corporation




ODA Loan

Private Bank

Implementing Agency

(Local Government), Public Corporation

Local Cost

Issuing Bond. etc.

70%:JBIC ODA Loan

30%:Private Bank with DCA guarantee

usaid jbic water collaboration 5 co financing model ii two step loans microfinance
USAID-JBIC Water Collaboration (5)Co-Financing model II: Two Step Loans /Microfinance



ODA Loan



Government (Ministry of Finance)


Farmers/ Ventures



Farmers /Ventures

Private / Public Bank


DCA Guarantee could be limited for the poorest beneficiaries.

usaid jbic water collaboration 6 co financing model iii up streaming down streaming co financing
USAID-JBIC Water Collaboration (6)Co-Financing model III: Up streaming- Down streaming co-financing





ODA Loan

Implementing Agency

Private sector


Infrastructure Project

e.g. Water Resource Development (Dams, Pipelines etc.)

Private Projects e.g. treatment facilities, distribution systems


USAID-JBIC Water Collaboration (7)

Simple Prototype of WRF











USAID-JBIC Water Collaboration (8)

Why are we aiming at cofinancing with USAID

For WRF?

  • The significance: frontier of sustainable water financing,
  • mobilizing private funds for water infrastructure
  • in developing countries.
  • ODA funds cannot meet the vast needs for water

infrastructure. Private funds less able to shape

regulatory/policy environment. Need both.

  • Complement strengths of each institution –

USAID: extensive knowledge of WRF based upon US

State Funds.

JBIC: long time experience and knowledge of water sector

  • in PH.
  • Key: how to strike balance between private-led financing VS

sovereign hook.

thank you for your attention
Thank you for your attention!

Megumi MUTO

Deputy Director

Planning Division, Development Strategy Department, JBIC Head Office

Any comments and any questions are welcomed anytime!