The Tokyo Metropolitan Government has narrowly escaped effective bankruptcy in fiscal 1998, and the financial future looks dismal, Governor Yukio Aoshima said Thursday.
"Without a fundamental change in (Tokyo's) fiscal structure, we won't be able to (continue to) avoid falling into bankruptcy," Aoshima said.
To tackle the crisis, the metropolitan government has trimmed its revenue shortfall in fiscal 1998 from 430 billion yen to 100 billion yen by, among other steps, cutting expenditures and issuing special bonds.
The red ink is the first in 18 years. By taking the austere measures, Tokyo escaped going under the control of the central government, which happens when local governments register a certain amount of red ink in a fiscal year.
Tokyo would be stripped of its fiscal autonomy if it accumulates 319.1 billion yen in losses by the end of the current fiscal year, March 31.
It's not alone in its financial strait. The prolonged economic slowdown is depriving municipal governments across the country of needed tax revenue, and prefectures such as Osaka and Aichi also are having problems filling their coffers.
Meanwhile, for the next fiscal year, Tokyo has unveiled a draft budget of 6.2 trillion yen -- a cut of 370 billion yen, or 5.6 percent, from the current year and the biggest reduction ever. Tax revenue in fiscal 1999 is expected to total 4.1 trillion yen, down 10.8 percent from this year. The shortfall will be covered by borrowing from different accounts and issuing new bonds.
The outstanding issue of metropolitan government bonds will come to 6.9 trillion yen by the end of fiscal 1999.
As for expenditures, investment outlays, chiefly for infrastructure, will be axed by 160 billion yen from the current fiscal year, to 898 billion yen, according to the draft.