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The amount of tax grants to local governments totaled 16.99 trillion yen for fiscal 2003, a decline of 7.5 percent from the previous fiscal year and the biggest-ever fall, the home affairs ministry said Friday.

It is the first time the grants have dropped for three consecutive years, reflecting the national government’s decision to stop borrowing to make up for shortfalls in grants, according to officials in the Public Management, Home Affairs, Posts and Telecommunications Ministry.

As a result, local governments are expected to issue their own debts for the third straight year to make ends meet.

The combined amount of the deficit-covering local government bonds stood at 5.88 trillion yen for fiscal 2003, up about 1.8-fold from the previous year, the officials said.