The Land, Infrastructure and Transport Ministry is planning to introduce a new system to provide interest-free loans to local governments to accelerate the building of roads in urban areas, ministry officials said Sunday.

The system is targeted at road construction projects in central areas of major cities that would likely stimulate related private investment, the officials said, adding that the ministry will include expenses for the project in its fiscal 2002 budget requests to be submitted later this month.

The loans will be available not only for road construction but also for projects to elevate railroad tracks in order to ease traffic congestion, they said.

The ministry is planning to urge the government’s task force for urban renewal to compile a bill to provide a legal basis for a provision of no-interest loans for urban road construction to head off objections that the system would unfairly favor major cities over the countryside.

The interest-free loans will be extended from the road development fund, which consists of loans from the government’s special account for road improvement and the private sector, the officials said. In the current fiscal year to March 2002, the fund has a 30 billion yen credit line.

The ministry intends to increase the amount of loans provided to the fund from the special account, they said.

Construction of a 1-km road in central Tokyo costs around 24 billion yen, and the central and metropolitan governments share the expense on an equal basis if the road is a national highway managed by the metropolitan government.

According to the ministry’s initial calculations, about 8 trillion yen in public investment is needed to complete road construction plans for the metropolis. However, it is also estimated that the improvement of the road network will generate 20 trillion yen in private investment for construction of facilities along highways.

In June, Tokyo Gov. Shintaro Ishihara proposed establishing a system to provide several trillion yen in no-interest loans to local governments for urban road construction. The Tokyo metropolitan government is currently facing financial difficulties.

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