Tied Loan

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Tied Loan

A loan that a government makes to a foreign borrower in exchange for the promise that the borrower will use the loan to purchase goods from the lender's country. A tied loan may be mutually beneficial; for example, it may spur business in the lending country while aiding the borrower's economic development.
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The rate cuts, eyed as part of efforts to ease conditions for such low-interest loans extended as official development assistance (ODA), will include a cut in tied loans to 0.
The results of the survey may lead to growing calls among politicians for greater use of tied loans, in which the Japanese government offers yen loans on condition that projects be undertaken by Japanese firms.
Pettifor also claimed Japan's policy of giving tied loans -- which call on the debtor country to spend the borrowed money on goods from the creditor country -- was serving poor countries badly.
The Clinton administration, it seems, wants flexibility and wants aid untied from tied loans and separated from aiding only the predictable few bedfellows.
TOKYO, March 25 Kyodo Prime Minister Keizo Obuchi intends to pledge more than 10 billion yen in tied loans with specially eased terms when he meets next Monday with Vietnamese Prime Minister Phan Van Khai, Foreign Ministry officials said Thursday.