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An advisory panel to the finance minister unveiled on Tuesday new accounting guidelines for government-affiliated corporations as part of an effort to improve transparency in their management.

The Fiscal System Council recommended that 78 of the firms be required to use the new standard — which is similar to that used in the private sector — and disclose a new kind of financial statement that clarifies the burden on taxpayers.

Although the government affiliates are required to compile income statements and balance sheets, various exceptions to the accounting rules have made their financial situation unclear.

In the proposal, the panel calls on each public entity to draw up a new administrative cost statement, a document that indicates the firm’s potential drain on public finances. In addition, accounting rules have been tightened regarding conventional financial statements.

The administrative cost statement also requires corporations to report capital injections from the government.

Based on the proposed new standard, the 78 public firms should draft all financial statements for the 2000 business year by the end of September.

The new accounting rules also require the corporations to put aside reserves to meet obligations for retirement and pension payouts, as well as loan-loss reserves, when drawing up balance sheets and income statements.

In addition, real estate held by those firms for sale should be valued at market prices.

The proposals also call for the disclosure of financial statements on a consolidated basis, which will reveal the financial condition of affiliated public firms.

ODA controversy

Finance Minister Masajuro Shiokawa’s reported proposal for official development assistance to be cut for fiscal 2002 by 10 percent from the current year is not official government policy, Chief Cabinet Secretary Yasuo Fukuda said Tuesday.

“I believe he was merely stating his personal opinion,” the top government spokesman said at a news conference.

“We are not at a point where we can discuss the specifics for next year’s budget. Even if he did make such comments, that does not mean a decision has been made to that effect,” he said.

Liberal Democratic Party officials quoted Shiokawa as making the remark Monday in a meeting with party members.

Japan remains the world’s largest ODA provider, despite the government ODA budget being cut by 3 percent to about 1.02 trillion yen for the current fiscal year.

Plan to shift revenue

A key government panel on economic and fiscal policy is expected to propose that more revenue be allocated to local governments, Finance Minister Masajuro Shiokawa said Tuesday.

Speaking before the House of Councilor Financial Affairs Committee, Shiokawa said he has agreed to allow the Council on Economic and Fiscal Policy to mention a need to shift revenue resources to local governments so as to encourage them to be more financially independent.

The proposal is to be included in an economic reform blueprint due out on Thursday, Shiokawa said.

“We would like to address the issue within the context of reassessing overall revenue resources, not just simply moving away from central to local governments,” Shiokawa said.

Reassessing the relationship between the central and local governments is a top priority in Prime Minister Junichiro Koizumi’s reform initiatives.

The Koizumi Cabinet wants to cut tax grants to local governments as part of its drive to streamline the national budget.

But the Public Management, Home Affairs, Posts and Telecommunications Ministry has demanded that many local governments reallocate revenue resources as a condition for such a move.

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