The Cabinet on Monday approved a draft for a 52.78 trillion yen fiscal investment and loan program for fiscal 1999, up 5.7 percent from the current year.
Finance Ministry officials said the increased “zaito” funding reflects the government’s resolve to solve the nation’s economic problems quickly.
The zaito program has two facets, general outlays and investment funds for financial markets. The general outlays go to government-affiliated firms and local governments, who then use the money to offer loans and make investments. The investment funds portion uses postal deposits and public insurance funds.
The draft calls for general outlays to increase 7 percent from the current fiscal year to 39.23 trillion yen and for 13.55 trillion yen to be managed in financial markets, up 1.9 percent from fiscal 1998.
The overall zaito budget, often called the second budget, is compiled separately from the government’s primary budget, the general account budget, which draws mainly on tax revenues. Zaito funds come from nontax income, including postal savings, and must eventually be returned.
The draft calls for more loans for small and midsize companies that are having difficulty raising funds due to the reluctance of commercial banks to extend loans to risky borrowers.
Specifically, Japan Finance Corp. for Small Business, a public corporation, will increase its lending reserves to 2.21 trillion yen, up 10 percent from the current year. If funds allocated for other public corporations, including Japan Development Bank, are added, more than 9.3 trillion yen would be disbursed to enhance corporate financing.
The program also features more funding for housing investment. Some 10.11 trillion yen, up 2 percent from this fiscal year, would be disbursed in the coming fiscal term.
As part of the government’s streamlining efforts, the 55 public corporations currently receiving zaito funds would be reduced to 48 by the end of fiscal 1999.
The plan calls for Japan Development Bank and another public corporation to be merged into an entity tentatively named the Japan Policy Investment Bank.
Likewise, the Export-Import Bank of Japan and the Overseas Economic Cooperation Fund would be merged into something tentatively called the International Cooperation Bank.
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