© 2006 The Associated Press
PHNOM PENH, Cambodia — The Japanese government on Monday told Cambodia's Prime Minister Hun Sen it would dramatically reduce interest rates to almost zero on new loans to the impoverished Southeast Asian nation.
Japanese Ambassador Takahashi Fumiaki officially announced the new rate during a ceremony held to mark the start of a Japanese-funded port renovation in Sihanoukville, 185 kilometers (115 miles) southwest of the capital, Phnom Penh.
Interest rates will be slashed from 0.9 percent to 0.01 percent on all new Japanese loans issues to the Cambodian government, said Tetsumi Murata, Counselor at the Japanese Embassy in Phnom Penh. The new rate will not be applied to existing loans.
The move is among new ways that Japan has decided to help the world's poorest nations, Murata said.
Hun Sen expressed his gratitude to the Japanese government, calling it "a huge decrease."
"When interest rates are 0.01 percent it is symbolic interest only, it is almost equivalent to a loan without any interest," he said.
According to the most recent information released by the Japanese Embassy in February, Cambodia has received grants totaling 16.1 billion yen (US$142.2 million; euro112.7 million ) and loans totaling 14.1 billion yen (US$124.7 million; euro98.7 million ) from Japan since 1993. These loans are to be repaid over a 30-year period.
Cambodia, as one of the world's least developed nations, has benefited from a number of debt relief schemes. In December last year, the International Monetary Fund wrote off US$82 million (euro69 million) owed by Cambodia.