The Cabinet on Thursday approved the final version of the government's general investment and loan program for fiscal 1998, which accounts for a total 36.66 trillion yen, down 6.8 percent from the current year.
Even after budget restoration talks between ministers, the program still marks the largest year-on-year decline in its 43-year history, in line with the government's policy of slimming the de facto second budget. The general investment and loan program is the core part of the overall fiscal investment and loan program, popularly known as "zaito," totaling 49.96 trillion yen for fiscal 1998, down 2.7 percent from the current year.
The "general" program refers to postal savings and public pension funds lent to government-affiliated firms and local governments to offer loans and investment; the overall program includes such funds managed in the financial markets.
Under the general zaito, the government allocated 1.5 billion yen for a company to conduct research before constructing the Chubu International Airport. This had not been included in the initial draft. The program also allocates 6.27 trillion yen for government-affiliated financial institutions to lend to small firms, marking a 19.2 percent rise over this year's figure. Small firms are having difficulties raising funds as commercial banks have become increasingly reluctant to lend to risky borrowers.
Such attitudes among banks, confirmed earlier this month in the Bank of Japan's quarterly survey of business sentiment, have helped worsen the stagnant economy.
Meanwhile, JNR Settlements Corp. will be excluded from the zaito program in fiscal 1998. The ministry decided to also exclude the National Forestry Services' special account, but appropriated 145 billion yen in fiscal 1998 for transitional loans until the forestry services are reformed next year.