By Leika Kihara
HORSHAM, England, March 14 Japan announced a $5
billion loan fund on Saturday to help developing nations, hard
hit by the global credit crisis, to put in place running water,
solar power systems and other environmental infrastructure.
Capital flight is plaguing emerging economies as U.S. and
European investors retreat to repair their balance sheets and
lending at home.
The outflow of funds from emerging markets -- and the
accompanying economic pain -- was a major concern when financial
leaders of the G20 developed and big emerging economies met over
the weekend in the south of England.
"The G20 confirmed the importance of supporting economies,
boosting bank capital, enhancing infrastructure and ensuring
smooth trade finance to deal with a sharp change in fund flows
to emerging nations," Finance Minister Kaoru Yosano told a news
conference after the meeting.
"These are things that Japan has been stressing all along."
Under the initiative, announced by Yosano at the G20
meeting, Tokyo will offer the money over the next two years for
public and private sector infrastructure projects mainly in
The loans will be extended to environmental projects such as
promoting solar power and providing more efficient sewage and
public transport systems.
Tokyo hopes the loans, to be made through state-backed trade
financier Japan Bank for International Cooperation, will help
stimulate Asian emerging economies hit by slumping global
demand, while also boosting long-term infrastructure.
The $5 billion will be in addition to the $1 billion
programme Tokyo unveiled at a G7 finance leaders' meeting in
Rome last month to support trade in Asian neighbours hit by
shrinking global trade and liquidity.
(Editing by Ruth Pitchford)