Japan freezes Vietnam loans in a corruption ultimatum

Friday, December 5, 2008

HANOI, Vietnam -- Japan has frozen low-interest loans to Vietnam until it takes “meaningful” steps to eliminate corruption in public works programs, Tokyo’s ambassador said Thursday.

The announcement was an embarrassing blow to Vietnam, which receives more development aid from Japan than any other single country.

Japanese ambassador Mitsuo Sakaba said his country would make no new loan pledges to Vietnam next year and would also suspend US$690 million in low-interest loans to support pending transportation and sewage projects in Vietnam.

In all, Japan pledged US$1.1 billion in low-interest development loans to Vietnam last year.

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