overview of fiscal investment and loan program 2019 · 2021. 5. 23. · financial institutions,...

Overview of Fiscal Investment

and Loan Program2019

Financial Bureau,Ministry of Finance, JAPAN

Urban Renaissance Agency /Earthquake disaster reconstructionproject / Public housing for disasterevacuees / Higashi MatsushimaCity, Miyagi Prefecture

Japan International Cooperation Agency/ Nam Ngum 1 Hydropower StationExpansion Project / Nam Ngum 1Hydropower Station/ Laos

Development Bank of Japan Inc. /Investment in Shelter Co., Ltd (tosupport fire resistance R&D) / NanyoCity Culture Hall / Nanyo City,Yamagata Prefecture

<FILP Utilization Cases>

I Fiscal Investment and Loan

Program

1 What Is Fiscal Investment and Loan Program?

2 How Does FILP Differ from Budget?

3 Why Is FILP Utilized?

4 Areas Where FILP Is Used

5 How FILP Has Been Utilized

6 FILP Reform Came as Turning Point

7 Initiatives to Secure FILP Soundness

II FILP Plan

1 Flowchart of Formulating FILP Plan

2 Key Points of FY2019 FILP Plan

III Reference

1 Transition in FILP Plan

2 What Are FILP Agencies?

Contents

People, companies,

comm

unities, etc.

(FILP agencies)

FILP Plan

Fiscal Loan (FILP

Special Account)

Industrial Investment

(FILP Special Account)

Government-affiliated financial institutions, etc.

(e.g.) - Japan Finance Corporation- Development Bank of Japan Inc.- Japan Bank for International

Cooperation- Japan International Cooperation

Agency

Local governments

Other agencies(e.g.) - Japan Student Services Organization- Japan Oil, Gas and Metals National

Corporation

Loans

Government Guarantee

Financial markets

FY2019 plan: 13.1 trillion yen

10.7 trillion yen

NTT shares, etc.

FILP bonds

Government-guaranteed

bonds

Loans, etc.

InvestmentDividends, etc.

0.4 trillion yen

Self fundraising (FILP agency bonds)

2.0 trillion yen

1 What Is Fiscal Investment and Loan Program?

The Fiscal Investment and Loan Program, widely called “FILP,”represents (1) Fiscal Loan, (2) Industrial Investment and (3)Government Guarantee.

(1) Fiscal Loan (5-year or longer)Fiscal Loan provides long-term, fixed and low-interest loans forprojects that are highly needed for policy purposes and secure loanrepayment.

(2) Industrial InvestmentIndustrial Investment induces the private sector investment byproviding risk money as pump-priming for projects that are highlyneeded for policy purposes and have potential returns but cannot befunded sufficiently by the private sector alone because of their highrisks, etc.

(3) Government Guarantee (5-year or longer)The Government guarantees the redemption of and interestpayments on bonds issued by and loans borrowed by FILP Agencies.The guarantee allows FILP Agencies to smoothly raise funds withmore favorable conditions.

I Fiscal Investment and Loan Program

(Note) Figures may not add up to the total because of rounding.

2 How Does FILP Differ from Budget?

• National budget uses taxes collected from taxpayers andother funds to implement projects that are difficult for theprivate sector to undertake, providing those fundsunilaterally in principle.

• In contrast, FILP uses not taxes but funds includingthose raised through the issuance of JapaneseGovernment Bonds to implement projects that areprofitable but difficult for the private sector alone tosufficiently fund. Beneficiaries from those projectsredeem those funds.

Public entities

People

TaxesSubsidies,

etc.Public

services

National governm

ent (G

eneral Account, etc.)

People

【Fund Flow of FILP】

Financial markets

FILP

FILP agencies

Beneficiaries

FILP bonds Loans

Interest payments/ redemption

Interest payments/ redemption

Shouldering financial resources for redemption

(low-interest fundraising based

on sovereign credit)

(long-term, low-interest)

Long-term, low-interest loans from

lenders

Public projects by business operators

【Fund Flow of Subsidies, etc. from the General Account, etc.】


3 Why Is FILP Utilized? • Beneficiaries from public projects can help to hold down tax

burdens by contributing costs and fees according to their benefits.• FILP based on the premise of recovering financial resources can

engage in business operations over a long time and providegovernance functions.

Urban Renaissance Agency / Rental housing program / Rental housing /Wako City, Saitama Prefecture

Japan Water Agency / Koishiwaragawa Dam construction project / Damconstruction / Asakura City, Fukuoka Prefecture

Special Account for Stable Supply of Food / Central Kimotsuki agriculturalirrigation project / Arase Dam / Kimotsuki Town, Kimotsuki-gun,Kagoshima Prefecture

The Okinawa Development Finance Corporation / Loan to Yamaniha (tosupport a café taking advantage of nature) / Restaurant facility / Nanjo City,Okinawa Prefecture


Japan Finance Corporation (Agriculture, Forestry, Fisheries and FoodBusiness Operations) / Expanding business size and increasing milkingefficiency /Rotary parlor / Kamishihoro Town, Hokkaido Prefecture

Development Bank of Japan Inc. / Investment and Loan to Green EnergyTsu (Support for Woody Biomass Power Generation Project) / WoodyBiomass Power Generation Facility / Tsu City, Mie Prefecture

4 Areas Where FILP Is Used

・SMEs and micro enterprisesFILP is used to support SMEs and micro enterprises that haveweak financial bases regarding creditworthiness and collateral,and cannot receive sufficient fund supply from private-sectorfinancial institutions alone.

・Agriculture, forestry and fisheries industryFILP is used for initiatives for the sustainable and sounddevelopment of the agriculture, forestry and fisheries industry,given that private financial institutions alone fail to providesufficient funds to the industry due to high risks involving naturalconditions and long production cycles.

・EducationFILP is used for student scholarship loans, earthquake resistanceimprovements in private school facilities and other educationalprojects.

・Welfare/Medical careFILP is used for tackling the falling birthrate and aging populationand for enhancing medical care arrangements.

Kochi Prefecture / Public project, etc. (New museumdevelopment project) / Kochi Castle Museum of History /Kochi City, Kochi Prefecture

Special Account for Stable Supply of Food / /Phase 2 CentralShinotsu Agricultural Irrigation Project / Ishikari Riverheadworks / Iwamizawa City and Tsukigata Town, Kabato-gun,Hokkaido Prefecture


・Industry/InnovationFILP is used to provide business funds (including risk money)required for creating innovations indispensable for enhancingindustrial competitiveness and invigorating industry.

・HousingFILP is used for post-disaster reconstruction projects for housingloans, public housing construction and other purposes inresponse to the Great East Japan Earthquake and otherdisasters.

・Social capitalFILP is used for projects to develop social capital such as airports,railways and expressways as these projects are large in scaleand take a long time for recovering funds.

・Overseas investment and loansFILP is used for maintaining and improving Japanese industry'sinternational competitiveness through the promotion of stableresources and energy security, and Japanese enterprises’overseas expansion in infrastructure and other fields.

New Kansai International Airport Co., Ltd. / Government-guaranteedBond-financed Project / Basic Airport and Aviation Security Facilities /Izumisano City, Tajiri Town, and Sennan-gun, Osaka Prefecture


・Local governmentsFILP is used for local government projects mainly for post-disaster restoration, remote area and underpopulated areadevelopmentdevelopment and othermeasures for which thenational government isresponsible, and for socialinfrastructure constructionclosely related to daily life,such as educational facilitiesand water sewage facilities.

5 How FILP Has Been Utilized

• Postwar reconstruction through high economicgrowth

• FILP gave priority to nurturing basic industries (coal, steel,shipping, electric power, etc.). In the high economic growth period,FILP was also used for infrastructure development where Japanwas still lagging behind Western countries and for housingincluding home purchases.

・Stable growth through post-bubble• FILP finance for housing and SMEs expanded from the late 1970s

through the early 1980s. Housing and SME finance, and lifeenvironment development (including urban development)accounted for 60% of FILP.

• In the 1990s after the burst of the economic bubble, FILP financefor housing expanded as public works were promoted to stimulatethe economy.


[Postwar reconstruction through high economic growth (major FILP utilization cases)]

Major fields FILP agencies FILP utilization cases

Housing Japan Housing Corporation Tama New Town and Takashimadaira Housing Complex development, etc.

SME support Small Business Finance Corporation

Lending to Sony Corp., Kyocera Corp. and other corporations in their startup and development phases

Social capital development

Japan Highway Public CorporationJapanese National RailwaysNew Tokyo International Airport Corporation

Construction of Tomei, Meishin and other expresswaysConstruction of Tokaido and Sanyo Shinkansen bullet train linesConstruction of Narita International Airport

Industry Electric Power Development Co.Japan Development Bank

Construction of dams for electricity supply (Miboro Dam), etc.Long-term loans for basic industries (coal, steel, shipping, electric power, etc.)

[Stable growth through post-bubble (major FILP utilization cases)]

Major fields FILP agencies FILP utilization cases

HousingHousing Loan CorporationResidential Land Development Corporation

Loans for housing constructionChiba New Town development, etc.

Life environment developmentLocal development

Housing and Urban Development CorporationJapan Regional Development CorporationWater Resources Development Public Corporation

Urban redevelopment (Minato Mirai 21), academic town (Tsukuba) development, etc.Iwaki New Town and Nagaoka New Town development, etc., rural city redevelopmentConstruction of Naramata, Sameura and other dams for developing and utilizing water resources

SME supportSmall Business Finance Corporation, People’s Finance Corporation

Lending to SMEs and other firms that have difficulties in receiving loans from private financial institutions

Social capital development

Japan Railway Construction Public CorporationAirport Development Special Account, etc.

Construction of Nagano and other Shinkansen bullet train linesOffshore expansion and re-expansion of Tokyo International Airport (Haneda Airport)

• From 2000s• While the economy was maturing, with the market mechanism

being developed, a thorough FILP reform (FILP Reform, p. 11)was implemented in FY 2001. FILP was used for responding tothe economic crisis following the 2008 Lehman Brothers collapseand to the 2011 Great East Japan Earthquake, providing support(Safety-Net Loans and Crisis Management Operations) for cash-strapped enterprises and funds for post-disaster restoration andreconstruction and for disaster prevention and reduction measures.

• In recent years, FILP has been used for supporting overseasinfrastructure development through government-affiliated financialinstitutions and public-private investment funds to promote theGovernment’s growth strategy.

• Currently, the Government is taking advantage of low interestrates to use FILP for large-scale transportation infrastructuredevelopment projects including those to accelerate the opening ofthe Linear Chuo Shinkansen line and the development of the ringroads in metropolitan areas.

Response to Economic and Financial Crisis after the 2008 Lehman Brothers collapse

FILP response to the Great East Japan Earthquake


Support measures Details

Safety-Net Loans for SMEs and micro business operators

Loans were made to SMEs and other firms that suffered temporary sales and profit drops due to social and other factors and were expected to recover over the medium to long term. Such loans provided between FY2008 and FY2010 totaled 11 trillion yen.

Crisis Response Operations

After the Lehman collapse, even large enterprises had difficulties in raising funds as it became difficult for them to issue bonds. To address cash flow deterioration for enterprises in response to the Government’s economic measures, Development Bank of Japan Inc. and The Shoko Chukin Bank, Ltd. designated by the Government for lending to private enterprises, provided crisis response loans.Crisis response loans from Development Bank of Japan Inc. totaled about 3.7 trillion yen, while those from The Shoko Chukin Bank, Ltd. aggregated about 4.8 trillion yen.

Emergency operations to support Japanese overseas business activities

In order to support overseas operations of Japanese enterprises, Japan Bank for International Cooperation provided about 2.5 trillion yen in loans.

Support measures Details

Financial support for enterprises, etc.

To stabilize business performances of SMEs and micro enterprises, Japan Finance Corporation created a special loan system for reconstruction from the Great East Japan Earthquake and a special capital enhancement system for supporting post-disaster reconstruction (a subordinated capital loan system for disaster-affected SMEs) in a bid to take all possible measures to support cash flow for enterprises. To stabilize business performances of disaster-affected business operators, the Government expanded crisis response loans (two-step loans) through the designated financial institutions (Development Bank of Japan Inc. and The Shoko Chukin Bank, Ltd.) to provide funds to meet demand.

Local government projectsFILP has provided funds for emergent and quick-impact disaster prevention/reduction measures (e.g. seismic retrofitting of public school facilities, anti-tsunami measures for rivers, etc.) based on lessons learned from the Great East Japan Earthquake.

Others FILP has provided funds for the reconstruction of housing and healthcare/welfare facilities damaged by the Great East Japan Earthquake.

(1) SMEs and micro enterprises (2) Agriculture, forestry and fisheries (3) Education (4) Welfare/medical care (5) Environment(6) Industry/innovation (7) Housing (8) Social capital(9) Overseas investments and loans (10) Others (including extraordinary financial measures loans)

<FILP Breakdown Trend>

(Note) On an initial plan basis.


(Housing Loan Corporation: 5.3)

(Airports: 0.2)

FY1961 FY1975 FY1995 FY2001 FY2018

(Roads: 5.8)

(Railways: 12.3)

(Local governments:20.7)

(Housing Loan Corporation: 9.5)

(Housing Loan Corporation:

24.8)

(Housing Loan Corporation:

28.0)

(Roads: 7.9)

(Roads: 7.5)(Roads: 10.2)

(Roads: 19.0)

(Railways: 12.0)

(Railways: 3.7)(Railways: 0.3)

(Railways: 0.1)

(Airports: 0.4)(Airports: 0.5)

(Airports: 0.4)





Problems● Passive funds:

Under the requirement for postal savings, pension reserves, etc. to bedeposited for FILP, financial resources for FILP accumulated irrespective offund demand.⇨ FILP size expansion and growing short-term investment (financial marketdistortions)

● Deposit rate:The interest rate on deposited postal savings and pension reserves was setto exceed market rates, with consideration given to the stability of postalsavings and pension reserves.⇨ FILP rate rises (rising fundraising costs for each FILP agency)⇨ Growing subsidies

● Fiscal discipline:FILP loans were provided without any sufficient policy cost analysis.⇨ Growing costs in later years

Main points of the Reform● Elimination of the requirement for all postal savings and

pension reserves to be deposited for FILP⇨Issuance of FILP bonds in line with fund demand to procure

financial resources as necessary

● Market issuance of FILP bonds as ordinary governmentbonds⇨ Taking advantage of sovereign creditworthiness to raise

funds at low cost

● Introduction of policy cost analysis and rigorous expansionof information disclosure

Postal savings

Pension reserves

Deposit

Government bonds

interest+0.2%

FILP (Trust Fund Bureau)

Loan

Government bonds

interest+0.2%

FILP agencies

[Old FILP] FILP Reform in FY2001

FILP

FILP agencies

Financial markets

FILP agency bonds (Self-procurement)

[New FILP]

Aggregate procurement

Scrutiny of required amount

FILP (government)

bonds

Loan interest rate≒ Government bonds interest

Postal savings

Pension reserves Abolition

6 FILP Reform Came as Turning Point

• In response, the FILP Reform was undertaken tomake FILP more efficient and consistent withmarket principles.

• Before the reform, all postal savings and pensionreserves had been required to be deposited asFILP financial resources. One FILP problem citedthen had been that financial resources hadaccumulated irrespective of policy requirementsand failed to be used efficiently.


7 Initiatives to Secure FILP Soundness

・Policy Cost Analysis

To enhance FILP information disclosure, the Governmentestimates future cash flows for FILP projects, checksprospects for FILP agencies’ business operations and thecertainty of fiscal loan and investment redemption, andcomputes and releases policy costs as future burdens ontaxpayers.

・Asset-Liability Management (ALM)

To reduce interest rate fluctuation risks arising from termmismatch between investment and fundraising, theGovernment tries to eliminate gaps between cash flows forassets like loans and liabilities such as FILP bonds.

・Reserves

In preparation for potential future losses, profits are reservedup to 50/1000 of total assets.

・On-Site Monitoring

(On-site monitoring of FILP agencies)On-site monitoring of FILP agencies covers incorporatedadministrative agencies which conduct FILP-target projects,checking the following: (1) Policy significance suitable forFILP-target projects, (2) Financial soundness and redemptioncertainty, (3) Actual situation of proper execution of funds.(On- site monitoring of local governments)Regarding local governments, the following are checked(1) how loans are used, (2) achievements of relevant projectsand (3) business conditions of local public enterprises, etc.


1 Flowchart of Formulating FILP Plan

(1) The government officers with jurisdiction over FILPagencies compile both budget requests to theGeneral Account, etc. and requests of FILP agenciesand submit them to the Minister of Finance.

(2) The Financial Bureau of the Ministry of Financescreens the requests of FILP agencies while hearingopinions from the FILP Subcommittee.

(3) The FILP Plan is put together in this way andsubmitted to the Cabinet Meeting simultaneously withthe budget.

(Reference) FILP SubcommitteeThe Fiscal System Council, an advisory panel to the Minister of Financethat considers the nation’s fiscal policy in general, has the FILPSubcommittee that consists of members with academic experience toprovide opinions on the annual FILP Plan, etc. based on relevant laws.

II FILP Plan

Budget

FILP requests

Budget requests

Examine FILP requests

Budgetary assessment

Submit FILP plan as part of budget to Cabinet Meeting

Cabinet Decision

Hearing from the Fiscal System

Council(Stipulated by law)

Submit to the D

iet

Approval of budget

FILP Plan

Submission sim

ultaneously w

ith budget requests from

each ministry

Adjustment betw

een departm

ents related to the M

inistry of Finance, and betw

een Ministry of Finance

and other Ministries

End of August End of December January

2 Key Points of FY2019 FILP Plan

The FY2019 plan focuses on:・Accelerating infrastructure development taking

advantage of current low interest rates・Enhancing private sector risk money supply

triggered by Industrial Investment.

II FILP Plan

Key Points of FY2019 FILP Plan

[Major policy measures]・ Accelerating infrastructure development taking advantage of current low interest rates (expressways and Kansai International Airport)

(1,150 billion yen in Fiscal Loan) ・ Responding fully to fund demand from small business operators, etc. ahead of the consumption tax increase [Assumed at 480 billion yen]

(Japan Finance Corporation)・ Enhancing private sector risk money supply triggered by Industrial Investment.(Development Bank of Japan) (80 billion yen in Industrial

Investment) [More than 500 billion yen in new investment including private sector investment], etc.

○ 7.1 trillion yen in priority investment for enhancing growth potential, etc. (more than 50%of the total plan size)

○ 1.9 trillion yen for supporting for global development by Japanese companies, etc., 1.1 trillion yen for education, welfare and medical services, 3.1 trillion yen for local governments, etc.

FY2018 FY2019

7,995.2 7,058.6

4,700.1 4,752.5

779.0 780.0

3,817.5 3,837.3of which:

1,959.5 2,080.3

1,038.0 988.0

483.0 530.0

103.6 135.2

3,295.1 2,306.1of which:

2,745.0 1,520.0

20.1 150.0

Breakdown

1. Priority investment for enhancing growth potential,

etc.

(1) Enhancing corporate growth potential

(2) Accelerating infrastructure development, etc.

Development Bank of Japan Inc. (DBJ)

Japan Finance Corporation (JFC)

The Okinawa Development Finance Corporation

Japan Expressway Holding and Debt Repayment

Agency

New Kansai International Airport Co., Ltd.

(Micro Business and Individual Operations)

(SME Operations)

(Agriculture, Forestry, Fisheries and Food

Business Operations)

(Unit: billion yen)

FY2018 FY2019

2,012.8 1,870.5

of which:

1,172.4 1,092.8

618.4 549.2

42.3 37.0

126.8 123.1

31.2 35.2

13.5 17.0

1,244.9 1,137.6of which:

707.5 674.4

348.6 293.1

4. Local Governments, etc. 3,210.2 3,052.7of which:

2,810.2 2,952.7

14,463.1 13,119.4FILP plan

Breakdown

2. Supporting for global development by Japanese

companies, etc.

3. Education, welfare and medical services

Japan Bank for International Cooperation (JBIC)

Japan International Cooperation Agency (JICA)

Welfare and Medical Service Agency

Local Governments

Japan Oil, Gas and Metals National Corporation (JOGMEC)

Japan Overseas Infrastructure Investment Corporation for

Transport & Urban Development (JOIN)

Fund Corporation for the Overseas Development of Japan's ICT

and Postal Services Inc. (JICT)

Cool Japan Fund Inc.

Japan Student Services Organization

○ The FY 2019 FILP size, though falling from the previous year due to a drop in refunding bond issue, etc., effectively remains almost unchanged.

○ Industrial Investment including capital subscriptions hits a record high.(FY2019 FILP Plan size: 13,119.4 billion, including 384.9 billion yen in Industrial Investment)

■ FILP

New Kansai International Airport Company, Ltd.○ After being hit by flooding caused by Typhoon Jebi in September 2018, Kansai International Airport plans anti-flooding measures including

the elevation of banks, the enhancement of drainage functions and the improvement of water protection for power equipment. Kansai AirportsGroup Co., which operates the airport, will implement these measures, with 50% of costs shouldered by New Kansai International AirportCompany, Ltd.○ Taking advantage of current low interest rates, New Kansai International Airport Company, Ltd. will replace its planned government-

guaranteed bond issues (10-year bonds, etc.) with a super-long-term (40-year), fixed-rate fiscal loan to reduce its future interest paymentburden.○ The scheme will be utilized for enhancing disaster prevention functions for Kansai International Airport.

[150 billion yen in Fiscal Loan]

(Unit: billion yen) ■ Enhancing anti-disaster functions by taking advantage of

current low interest rates

Replacing government-guaranteed bond issues with Fiscal Loan(150 billion yen in super-long-term (40-year), fixed-rate Fiscal Loan)

New Kansai International Airport Company, Ltd.: Reducing interest payments by some 27 billion yen

⇒ Using the loan for enhancing disaster prevention functions■ Damage

New Kansai International Airport

Company, Ltd.Kansai Airports

Implementing measuresAbout 54 billion yen

BurdenAbout 27 billion yen

FY2018 plan FY2019 plan

FILP 20.1 150.0

Fiscal Loan - 150.0

Government Guarantee 20.1 -

■ (Reference) Image of measures

Tetrapods

Elevating

Bank

Flood barriers (water barriers)

Elevating【Runways and tarmacs】・Flooded almost completely

Cargo building

【Ground handling】・Some 90% of about 600 self-propelled vehicles such as towing cars and about 2,200 non-self-propelled vehicles were flooded* Information from two airlines

Runway B

Second terminal building

【Passenger handling systems】・Blackout and flooding made some systems (for check-in, baggage-related and other operations) unavailable.

【Aero plaza (commercial complex)】・Glass in a rest area on the second floor was broken, slightly injuring a passenger in the arm.

First terminal buildingOffshore terminal

Access bridge

【First terminal building】・Flooding damaged power, air-conditioning, passenger/cargo-handling and disaster prevention equipment.・Power outage came at the north side of the terminal’s first and second floors and at the third floor.

Runway A

II FILP Plan

■ FILP

Japan Expressway Holding and Debt Repayment Agency○ Taking advantage of current low interest rates, the agency will replace its planned government-guaranteed bond issues (10-year bonds,

etc.) with a super-long-term (40-year), fixed-rate fiscal loan to substantially reduce its future interest payment burden. This scheme willbe used for:

(1) Improving productivity through the development of expressway networks linked directly to efficient logistics services.(2) Enhancing disaster prevention functions of basic infrastructure for safe, secure national life

(Unit: billion yen)

■ (Reference) Project exampleJapan Expressway Holding and Debt

Repayment Agency Holding assets

Expressway companies

(6 companies)

Lending assets

Management

Toll collection

Construction

Renewal

FILP agency bonds

Government-guaranteed bonds

Borrowing

Paying rentals

Assuming liabilities(R

eplacing debts)

Repaying debt

■ Taking advantage of current low interest rates to accelerate

expressway development

Adding 1 trillion yen in super-long-term (40-year), fixed-rate Fiscal Loan

Agency: Reducing interest payments by some 700 billion yen⇒ Increasing debt assumption capacity

(Planned projects)

○Transforming the new Meishin Expressway into a six-lane road

○Transforming interim two-lane expressways into four-lay roads, etc.

Expressway companies: Increasing investment capacity

■ Project scheme


FILP 2,745.0 1,520.0

Fiscal Loan 1,500.0 1,000.0

Government Guarantee 1,245.0 520.0

[1,000 billion yen in Fiscal Loan, 520 billion yen in Government Guarantee]

Holding expressways

Construction distance: 41km (Kameyamanishi JCT – Otsu JCT)

Mie Prefecture

Koka-Tsuchiyam

aIC

Shiga Prefecture

Kyoto Prefecture

[Otsu JCT][Kameyamanishi JCT]

Yokaichi IC

Otsu IC

Suita JCT

Takatsuki JCT・IC

Joyo JCT・IC

Kameyam

aJC

T

YokkaiichiJCT

Shin-Yokkaichi JC

T

Maibara

JCT

Aichi Prefecture

Ichinomiya JC

T

Komaki JC

T

Nagoya ICPlanned to open in FY2023

Planned to open in FY2018

Fiscal Loan Planned to open in FY2023

Specific cases

Since FY2018, JFC has checked business operators’ hopes for JFC’s jointloans with private sector financial institutions (syndicated and commissionedloans) regarding all loan deals in principle and introduced deals to privatesector financial institutions according to their hopes.

Japan Finance Corporation (JFC)

(Agriculture, Forestry, Fisheries and Food Business Operations) ○ JFC secures the scale of business and FILP funds increased from the previous year to support farmers’ capital

investment for business intensification and expansion in cooperation with private sector financial institutions.[530 billion yen in Fiscal Loan]

■ Scale of business and FILP ■ Enhancing cooperation with private sector financial institutions

■ Farmers’ business intensification and expansion initiatives□ Livestock farmingA rotary parlor (automatic milker) tosave milking labor

□ Greenhouse-grown vegetablesA large greenhouse using information andcommunication technologies forenvironmental control (for temperature,humidity, carbon dioxide, etc.)

□ Outdoor-grown vegetablesA high-performance tractor with a globalpositioning system to improve operationalefficiency

□ Greenhouse-grown vegetablesA non-destructive sensor to sortgrape tomatoes by sugar content

Business operator

Japan Finance Corporation

(JFC)

Private sector financial

institution

③ Lending

③ Lending

Joint lending

① Loan consultationChecking any hope for joint lending)

② Introducing a deal


Scale of business 615.0 656.0Agricultural Management Framework Reinforcement Loan(Super L Loan)

372.8 400.0

Loan Program 591.0 646.0

FILP 483.0 530.0

Fiscal Loan 483.0 530.0

(Unit: billion yen)

□ Image of cooperation with private sector financial institutions

Japan Finance Corporation (JFC) (Micro Business and Individual Operations/ Small and Medium

Enterprise Operations)

Scale of business FY2018 plan FY2019 plan

Micro Business and Individual Operations

2,640.0 2,800.0

SME Operations 1,800.0 1,540.0

(Unit: billion yen)

(Unit: billion yen)

Providing funds proactively to flexibly meet demand for fundsrequired for temporary purchases responding to last-minutedemand before the tax increase and for business operationsamid a reactionary demand fall after the tax change.

FILP FY2018 plan FY2019 plan

Micro Business and

Individual Operations

FILP 1,959.5 2,080.3Fiscal Loan 1,880.0 2,007.0Industrial Investment 4.5 8.3Government Guarantee 75.0 65.0

SME O

perations

FILP 1,038.0 988.0Fiscal Loan 889.5 895.5Industrial Investment 38.5 37.5Government Guarantee 110.0 55.0

■Scale of business and FILP

■Priority initiatives in FY2019 PlanEnhancing support for research-orientedventures through subordinated capital loansto improve business operators’ productivityand competitiveness

■Sufficient response to fund demand accompanying the consumption tax increase

Enhancing business succession-related funds toback up smooth business successions for SMEsthat support local economies

○ JFC secures the scale of business and FILP funds needed to fully support small and medium enterprises and microbusiness operators that are vulnerable to the planned consumption tax increase, based on past business performance.○ While promoting cooperation with private sector financial institutions, JFC gives priority to supporting business start-up,new business, business succession and other initiatives to improve productivity and revitalize local economies.

[Micro Business and Individual Operations: 2,007 billion yen in Fiscal Loan, 8.3 billion yen in Industrial Investment, 65 billion yen in Government Guarantee][SME Operations: 895.5 billion yen in Fiscal Loan, 37.5 billion yen in Industrial Investment, 55 billion yen in Government Guarantee]

Companies striving to improve

productivity

Bank loans

Bank loans

JFC capital loans

[Prepared by the Small and Medium Enterprise Agency]

Breakdown of SME (corporation) owners by age bracket

(10,000 persons)

The most dominant age for SME owners shifted from 47 to 66 in 20 years

II FILP Plan

○Based on the Local Government Bond Program, Fiscal Loan funds are provided to local governments mainly for post-disaster restoration and other operations for which the national government is responsible and for developing water andsewage facilities and other social infrastructure related closely to daily life.

○In response to natural disasters that have become more frequent in recent years, Fiscal Loan funds are proactively providedto a new emergency program for disaster prevention/reduction and national resilience enhancement (FY2019: 304.2 billionyen)

[2,952.7 billion yen in Fiscal Loan]

FY2019 Local Government Bond Program and Fiscal Loan funds for local governments

Trends of Fiscal Loan funds for local governments and the Local Government Bond Program

(Notes) 1. On an initial plan basis.2. For Japan Finance Organization for Municipalities Funds (JFM Funds), figures for Japan Finance

Corporation for Municipal Enterprises are used for the first half of FY2008 and figures for JapanFinance Organization for Municipal Enterprises are used for the second half of FY2008.

(Note) Excluding Fiscal Loan funds for a new emergency program for disasterprevention/reduction and national resilience enhancement, etc., Fiscal Loan funds forlocal governments in FY2019 total 2,646.5 billion yen, accounting for 23.8% of the LocalGovernment Bond Program.

Local Governments

(Unit: billion yen)

ItemFY2018

plan

FY2019

plan

General account bonds,

public enterprise bonds, etc. 7,664.4 8,751.6

Fiscal Loan funds 1,873.4 2,203.6

Fiscal Loan share 24.4% 25.2%

Extraordinary financial

measures loan3,986.5 3,256.8

Fiscal Loan funds 936.8 749.1


Total 11,650.9 12,008.4

Fiscal Loan funds 2,810.2 2,952.7


Fiscal Loan funds

Public funds ratio

Funds from Japan Finance Organization for Municipalities Public offering funds ratio

Private sector funds (publicly offered bonds + bonds underwritten by banks, etc.)Fiscal Loan funds ratio

(Trillion yen)

Public funds ratio39.9% (FY2019)

Local Government Bond Program size

12.0 trillion yen (FY2019)

Public offering funds ratio

32.8% (FY2019)

Fiscal Loan funds ratio

24.6% (FY2019)

Fiscal Loan funds3.0 trillion yen

(FY2019)

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019


Scale of business 2,473.0 2,610.0

FILP 779.0 780.0

Fiscal Loan 300.0 300.0

Industrial Investment 129.0 130.0

Government Guarantee 350.0 350.0

Development Bank of Japan Inc. (DBJ)

○ DBJ uses Industrial Investment as pump-priming for providing abundant private sector funds as risk money for growth areas to enhance Japan’s economic growth potential.

[FY2019 Plan: 130 billion yen in Industrial Investment]

Mechanism for enhancing private sector risk money supply

Enhancing competitiveness

Regional vitalization

Energy

New industries and business realignment

Real estate / infrastructure

Transportation and traffic

Example: Offshore wind power generation

Example: HydrogenExample: Communications tower

Example: Airport

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Examples: Tourism, inbound tourists

Example: Local industries

■ Scale of business and FILP (Unit: billion yen)

More than 500 billion yen in new investment including private funds in FY2019

FILP (Industrial Investment)

Investment

DBJBusiness

operators, etc.

Investment

Private sector financial

institutions, etc.

Investment

Inducement effect

■ Images of priority areas

II FILP Plan

37.5

32.5

26.8

23.4

20.5

17.2 15.0 14.2

13.9

15.9 18.4

14.9 17.6

18.4 16.2

14.6 13.5

15.1

13.1

[38.1]

[32.9]

[26.9]

[20.7]

[16.6]

[23.9]

[18.6][20.6]

[19.0] [19.1][16.5]

[14.9]

[17.9][15.9] [15.1]

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0 Initial planRevised plan (Revision with supplementary budgets and follow-up funding by the flexible management clause)

14.5

(Unit: trillion yen)

September 2008The Lehman Shock

March 2011The Great East Japan Earthquake

Transition (flow) in FILP Plan

(Fiscal year)

Transition (stock) in FILP Plan balance

417.8 410.2

390.6 354.0

332.5 299.6

275.5 245.1

216.0 201.9

189.2 181.1

175.7 169.3

162.2 154.3

150.9 148.1

142.5

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(Unit: trillion yen)

0.0

(End of f iscal y ear)

1 Transition in FILP Plan

III Reference

Transition (flow) in FILP Plan

(Notes)1. On an initial plan basis. Data in parentheses are those revised with supplementary budgets and follow-up funding by the flexible management clause.2. The figure for FY2000 is based on general FILP.

(Note) The figures through FY2018 are the actual budget performances.

FILP agencies are institutions that utilize FILP.FILP agencies play their respective policy roles as followsunder the FY2019 FILP Plan:

2 What Are FILP Agencies?

(Unit: billion yen)

(Note) Figures are based on the initial plan of FY2019.

III Reference

Institution name Fiscal Loan

Industrial Investment

Government Guarantee Total

(Special Accounts)Special Account for Stable Supply of Food 2.2 - - 2.2Special Account for Energy Policy 13.0 - - 13.0(Government Financial Institutions)Japan Finance Corporation 3,671.5 45.8 120.0 3,837.3The Okinawa Development Finance Corporation 133.3 1.9 - 135.2Japan Bank for International Cooperation 289.3 63.5 740.0 1,092.8Japan International Cooperation Agency (Incorporated Administrative Agency) 485.2 - 64.0 549.2(Incorporated Administrative Agencies, etc.)The Promotion and Mutual Aid Corporation for Private Schools of Japan 29.1 - - 29.1Japan Student Services Organization (Incorporated Administrative Agency) 674.4 - - 674.4Welfare and Medical Service Agency (Incorporated Administrative Agency) 293.1 - - 293.1National Hospital Organization (Incorporated Administrative Agency) 85.5 - - 85.5National Cancer Center Japan (National Research and Development Agency) 2.9 - - 2.9National Cerebral and Cardiovascular Center (National Research and Development Agency) 3.0 - - 3.0National Center for Child Health and Development (National Research and Development Agency) 1.2 - - 1.2National Center for Geriatrics and Gerontology (National Research and Development Agency) 1.8 - - 1.8National Institution for Academic Degrees and Quality Enhancement of Higher Education (Incorporated Administrative Agency) 46.6 - - 46.6Japan Railway Construction, Transport and Technology Agency (Incorporated Administrative Agency) 35.1 3.2 - 38.3Japan Housing Finance Agency (Incorporated Administrative Agency) 63.5 - - 63.5Urban Renaissance Agency (Incorporated Administrative Agency) 445.4 - - 445.4Japan Expressway Holding and Debt Repayment Agency (Incorporated Administrative Agency) 1,000.0 - 520.0 1,520.0Japan Water Agency (Incorporated Administrative Agency) 5.8 - - 5.8Japan Finance Organization for Municipalities - - 100.0 100.0Forest Research and Management Organization (National Research and Development Agency) 5.7 - - 5.7Japan Oil, Gas and Metals National Corporation (Incorporated Administrative Agency) 0.8 36.2 - 37.0(Local Governments)Local Governments 2,952.7 - - 2,952.7(Special Corporations)Development Bank of Japan Inc. 300.0 130.0 350.0 780.0New Kansai International Airport Company, Ltd. 150.0 - - 150.0Organization for Promoting Urban Development - - 25.0 25.0Central Japan International Airport Co., Ltd. - - 3.4 3.4Private Finance Initiative Promotion Corporation of Japan - - 50.0 50.0Cool Japan Fund Inc. - 17.0 - 17.0Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development - 60.6 62.5 123.1Fund Corporation for the Overseas Development of Japan's ICT and Postal Services Inc. - 26.7 8.5 35.2

Total 10,691.1 384.9 2,043.4 13,119.4

overview of fiscal investment and loan program 2019 · 2021. 5. 23. · financial institutions,...

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