-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uf2CI1/bMhsPmZ6lNPJEO1zecjE7LPW3klbx82Hs5LEkaWN0VjKVN73z9uDESOvF nrbCT0beUpUyCTgwZzlEWw== 0000950123-04-011514.txt : 20040929 0000950123-04-011514.hdr.sgml : 20040929 20040929120351 ACCESSION NUMBER: 0000950123-04-011514 CONFORMED SUBMISSION TYPE: 18-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JAPAN CENTRAL INDEX KEY: 0000837056 STANDARD INDUSTRIAL CLASSIFICATION: FOREIGN GOVERNMENTS [8888] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 18-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-23423-01 FILM NUMBER: 041051767 BUSINESS ADDRESS: STREET 1: C/O JAPAN DEVELOPMENT BANK STREET 2: 575 FIFTH AVENUE 28TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 18-K 1 k00752e18vk.htm JAPAN JAPAN
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 18-K

For Foreign Governments and Political Subdivisions Thereof

ANNUAL REPORT

of

JAPAN

(Name of registrant)

Date of end of last fiscal year: March 31, 2004

SECURITIES REGISTERED*

(As of the close of the fiscal year)
         
 
    Amounts as to   Names of
    Which Registration   Exchanges on
Title of Issue   is Effective   Which Registered
 
N/A   N/A   N/A
 

Names and addresses of persons authorized to receive notices
and communications from the Securities and Exchange Commission:

NOBUCHIKA MORI
Consulate General of Japan in New York
1 Chase Manhattan Plaza
New York, New York 10005

Copies to:

 
JOHN D. YOUNG, JR.
Sullivan & Cromwell LLP
Otemachi First Square
5-1, Otemachi 1-chome
Chiyoda-ku, Tokyo 100-0004
Japan

*   The Registrant is filing this annual report on a voluntary basis.

 

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SIGNATURE
EXHIBIT INDEX
EX-1 DESCRIPTION OF JAPAN, DATED SEPTEMBER 29, 2004

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The information set forth below is to be furnished:

1.   In respect of each issue of securities of the registrant registered, a brief statement as to:

  (a)   The general effect of any material modifications, not previously reported, of the rights of the holders of such securities.
 
      Not applicable.*
 
  (b)   The title and the material provisions of any law, decree or administrative action, not previously reported, by reason of which the security is not being serviced in accordance with the terms thereof.
 
      Not applicable.*
 
  (c)   The circumstances of any other failure, not previously reported, to pay principal, interest, or any sinking fund or amortization installment.
 
      Not applicable.*

2.   A statement as of the close of the last fiscal year of the registrant giving the total outstanding of:

  (a)   Internal funded debt of the registrant. (Total to be stated in the currency of the registrant. If any internal funded debt is payable in foreign currency it should not be included under this paragraph (a), but under paragraph (b) of this item.)
 
      Reference is made to page 25 of Exhibit 1 hereto.
 
  (b)   External funded debt of the registrant. (Totals to be stated in the respective currencies in which payable. No statement need be furnished as to intergovernmental debt.)
 
      None.

3.   A statement giving the title, date of issue, date of maturity, interest rate and amount outstanding, together with the currency or currencies in which payable, of each issue of funded debt of the registrant outstanding as of the close of the last fiscal year of the registrant.

       
 
    Reference is made to page 25 of Exhibit 1 hereto.
 
     
4.
  (a) As to each issue of securities of the registrant which is registered, there should be furnished a break-down of the total amount outstanding, as shown in Item 3, into the following:

  (1)   Total amount held by or for the account of the registrant.
 
      Not applicable.*
 
  (2)   Total estimated amount held by nationals of the registrant (or if registrant is other than a national government by the nationals of its national government); this estimate need be furnished only if it is practicable to do so.
 
      Not applicable.*
 
  (3)   Total amount otherwise outstanding.

*   No securities of the registrant are registered under the Securities Exchange Act of 1934, as amended.

2

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      Not applicable.*
       
  (b)   If a substantial amount is set forth in answer to paragraph (a)(1) above, describe briefly the method employed by the registrant to reacquire such securities.
 
      Not applicable.*

5.   A statement as of the close of the last fiscal year of the registrant giving the estimated total of:

  (a)   Internal floating indebtedness of the registrant. (Total to be stated in the currency of the registrant.)
 
      Reference is made to page 26 of Exhibit 1 hereto.
 
  (b)   External floating indebtedness of the registrant. (Total to be stated in the respective currencies in which payable.)
 
      None.

6.   Statement of the receipts, classified by source, and of the expenditures, classified by purpose, of the registrant for each fiscal year of the registrant ended since the close of the latest fiscal year for which such information was previously reported. These statements should be so itemized as to be reasonably informative and should cover both ordinary and extraordinary receipts and expenditures; there should be indicated separately, if practicable, the amount of receipts pledged or otherwise specifically allocated to any issue registered, indicating the issue.

       
 
    Reference is made to pages 20 to 22 of Exhibit 1 hereto.
 
     
7.
  (a) If any foreign exchange control, not previously reported, has been established by the registrant (or if the registrant is other than a national government, by its national government), briefly describe the effect of any such action, not previously reported.

      None.
 
  (a)   If any foreign exchange control previously reported has been discontinued or materially modified, briefly describe the effect on any such action, not previously reported.
 
      Not applicable.

8.   Brief statements as of a date reasonably close to the date of the filing of this report (indicating such date), in respect of the note issue and gold reserves of the central bank of issue of the registrant, and of any further gold stocks held by the registrant.

      Reference is made to pages 17 and 18 of Exhibit 1 hereto.

9.   Statements of imports and exports of merchandise for each year ended since the close of the latest year for which such information was previously reported. The statements should be reasonably itemized so far as practicable as to commodities and as to countries. They should be set forth in items of value and of weight or quantity; if statistics have been established in terms of value, such will suffice.

      Reference is made to pages 14 and 15 of Exhibit 1 hereto.

*   No securities of the registrant are registered under the Securities Exchange Act of 1934, as amended.

3

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10.   The balances of international payments of the registrant for each year ended since the close of the latest year for which such information was previously reported. The statements of such balances should conform, if possible, to the nomenclature and form used in the “Statistical Handbook of the League of Nations.” (These statements need to be furnished only if the registrant has published balances of international payments.)

      Reference is made to page 16 of Exhibit 1 hereto.

    This annual report comprises:

  (a)   The cover page and pages numbered 2 to 6 consecutively.
 
  (b)   The following exhibits:

  (1)   Description of Japan, dated September 29, 2004.
 
  (2)   Copy of the Initial Annual Budget of the registrant for the fiscal year ending March 31, 2005 (in Japanese only).*

      This Annual Report is filed subject to the Instructions for Form 18-K for Foreign Governments and Political Subdivisions Thereof.

*   Filed by paper under cover of Form SE on September 29, 2004.

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SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, at New York, New York on the 29th day of September, 2004.
         
  JAPAN
 		  
  By   /s/ Nobuchika Mori    
    Nobuchika Mori   
    Ministry of Finance, Consulate General in New York   

5

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EXHIBIT INDEX

     
Exhibit    
Number
   Description
1.
  Description of Japan, dated September 29, 2004
2.
  (P) Copy of the Initial Annual Budget of the registrant for the fiscal year ending March 31, 2005 (in Japanese only)*

*   Filed by paper under cover of Form SE on September 29, 2004.

6

EX-1 2 k00752exv1.htm EX-1 DESCRIPTION OF JAPAN, DATED SEPTEMBER 29, 2004 EX-1
 

Exhibit 1

 

Japan

 

This description of Japan is dated September 29, 2004 and appears as Exhibit 1 to Japan’s Annual Report on Form 18-K to the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2004.

 

 

     THE DELIVERY OF THIS DOCUMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS DOCUMENT (OTHERWISE THAN AS PART OF A PROSPECTUS CONTAINED IN A REGISTRATION STATEMENT FILED UNDER THE U.S. SECURITIES ACT OF 1933) DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF OR GUARANTEED BY JAPAN.

TABLE OF CONTENTS

         
GENERAL
     4  
Area and Population
     4  
Government
     4  
Political Parties
     4  
International Organizations
     5  
THE ECONOMY
     6  
General
     6  
Economic Policies
     6  
Gross Domestic Product and National Income
     8  
Industry
     10  
Energy
     10  
Price Indices
     11  
Labor
     12  
FOREIGN TRADE AND BALANCE OF PAYMENTS
     13  
Foreign Trade
     13  
Balance of Payments
     16  
Official Foreign Exchange Reserves
     17  
Foreign Exchange Rates
     17  
FINANCIAL SYSTEM
     18  
The Bank of Japan and Monetary Policy
     18  
Government Financial Institutions
     18  
Private Financial Institutions
     18  
GOVERNMENT FINANCE
     19  
Revenues, Expenditures and Budgets
     19  
Tax Structure
     22  
Fiscal Investment and Loan Program (“Zaito”)
     23  
DEBT RECORD
     24  
JAPAN PUBLIC DEBT
     24  
INTERNAL DEBT
     25  
EXTERNAL DEBT
     28  
SUBSCRIPTIONS TO INTERNATIONAL FINANCIAL ORGANIZATIONS
     29  

FURTHER INFORMATION

     This document appears as an exhibit to Japan’s Annual Report filed with the U.S. Securities and Exchange Commission (the “Commission”) on Form 18-K for the fiscal year ended March 31, 2004. Additional information with respect to Japan is available in such Annual Report, in the other exhibits to such Annual Report and in amendments thereto. Such Annual Report, exhibits and amendments may be inspected and copied at the public reference room maintained by the Commission at: 450 Fifth Street, N.W., Washington, D.C. 20549. Information regarding the operations of the public reference room can be obtained by calling the Commission at 1-800-SEC-0330. The Annual Report and its exhibits and amendments are also available through the Commission’s Internet website at http://www.sec.gov.

     In this document all amounts are expressed in Japanese Yen (“¥” or “yen”), except as otherwise specified. The spot buying rate quoted on the Tokyo Foreign Exchange Market on September 28, 2004, as reported by The Bank of Japan at 5:00 p.m., Tokyo time, was ¥111.65=$1.00, and the noon buying rate on September 28, 2004 for cable transfers in New York City payable in yen, as reported by the Federal Reserve Bank of New York, was ¥111.48=$1.00. See “Foreign Trade and Balance of Payments — Foreign Exchange Rates”.

-2-

 

     References herein to Japanese fiscal years (“JFYs”) are to 12-month periods commencing in each case on April 1 of the year indicated and ending on March 31 of the following year. References to years not specified as being JFYs are to calendar years.

-3-

 

Japan

GENERAL

Area and Population

     Japan, an archipelago in the western Pacific, consists of four main islands (Hokkaido, Honshu, Kyushu and Shikoku) which are mostly mountainous located in the same approximate range of latitude as the east coast of the United States north of Florida. The total area of Japan is approximately 146,000 square miles, which is slightly less than that of California and about 4% of the United States. It is bordered by the Sea of Japan to the west and north, and by the Pacific Ocean to the east and south.

     Japan has a total population of approximately 127.7 million (estimated as of February 2004). It has one of the highest population densities in the world and approximately 22% of its people are concentrated in three metropolitan areas (Tokyo, Osaka and Nagoya). Japan’s average annual rate of population increase during the years 1999-2003 was 0.2%. Japan’s population increased 0.14% during the 12 months ended October 1, 2003.

Government

     The legislative power in Japan is vested in the Diet, which currently consists of a House of Representatives having 480 members and a House of Councillors having 242 members. Members of both houses are elected by direct universal suffrage, except that some members of each house are elected by proportional representation. The power of the House of Representatives is superior to that of the House of Councillors in respect of approving the national budget and electing the Prime Minister.

     The executive power is vested in the Cabinet consisting of a Prime Minister, elected by the Diet from among its members, and other Ministers appointed by the Prime Minister, a majority of whom must be members of the Diet. The judicial power is vested in the Supreme Court and such lower courts as are established by law.

     Japan’s 47 prefectures, and its cities, towns and villages, have a certain degree of local autonomy through popularly elected legislative bodies and chief executives. The central government exercises its influence on local governments indirectly through financial aid and prescribing standards of local administration.

Political Parties

     Members of the House of Representatives are elected for four-year terms unless the House of Representatives is dissolved prior to expiration of their terms. The House of Representatives was dissolved on October 10, 2003 and an election was held on November 9, 2003. Three-hundred members were elected from single-member districts and 180 members were elected through a proportional representation process from 11 regional districts. The House of Councillors currently consists of 242 members who are elected for six-year terms with one-half of the membership being elected every three years. In an election in July 2004, 121 members were elected, of which 48 members were elected through a proportional representation system and 73 members were elected from 47 districts that correspond to one metropolis and 46 prefectures of Japan. Currently, the House of Councillors consists of 121 members who were elected in July 2001 and 121 members who were elected in July 2004.

-4-

 

     The following tables sets forth the membership by political party of the House of Representatives as of June 4, 2004 and the House of Councillors as of August 9, 2004.

         
    House of
    Representatives
Liberal Democratic Party
     249  
Democratic Party of Japan and Club of Independents
     178  
New Komeito
     34  
Japanese Communist Party
     9  
Social Democratic Party
     6  
Independents
     4  
Vacancies
     0  
 
    
 		  
Total
     480  
 
    
 		  
         
    House of
    Councillors
Liberal Democratic Party
     114  
The Democratic Party and The Shin-Ryokufukai
     83  
New Komeito
     24  
Japanese Communist Party
     9  
Social Democratic Party
     5  
Independents (Mushozoku no kai)
     0  
Independents
     7  
Greens
     0  
Vacancies
     0  
 
    
 		  
Total
     242  
 
    
 		  

International Organizations

     Japan is a member of the United Nations and other international organizations, including the International Monetary Fund, International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, International Fund for Agricultural Development, Multilateral Investment Fund, Multilateral Investment Guarantee Agency, Asian Development Bank, African Development Bank, African Development Fund, European Bank for Reconstruction and Development, Inter-American Development Bank and Inter-American Investment Corporation. See “Subscriptions to International Financial Organizations”.

-5-

 

THE ECONOMY

General

     Japan has a highly advanced and diversified economy, which has developed in response to changing conditions in Japan and the world. During the era of high economic growth in the 1960s and the early 1970s, the expansion was based on the development of heavy industries consuming large quantities of resources. During the 1980s, there was rapid growth in high value-added industries, such as electronics and precision instruments, which employ high level technology and consume relatively low quantities of resources. The service sector of the economy grew significantly during the 1980s and 1990s.

     The Japanese economy has experienced a significant downturn since the early 1990s, in the aftermath of the collapse of the “bubble” economy, which has been characterized by, among other things, a depreciation in asset values (particularly affecting the domestic real estate and securities markets), reduced capital investment and housing construction and the deterioration in credit quality of loans and other assets in the financial system. In the wake of failures of Japanese banks and other financial institutions, beginning in JFY 1997, a series of legislative measures were taken to stabilize the Japanese financial system, including legislation authorizing the Japanese Government to temporarily nationalize financially troubled Japanese banks under certain circumstances. Several banks have been nationalized in recent years, and some of these banks have subsequently been returned to private sector ownership. The economic situation was extremely severe from the late 1990s to the early 2000s due to decreases in demand, including personal consumption, business investment and housing investment, reflecting the deterioration in consumer and corporate sentiments arising from concerns about employment prospects and the direction of the domestic and world economies.

     Since JFY 2002, there have been some signs of recovery in the Japanese economy, such as increases in corporate profits, exports and production. The provisional real growth rate of Japan’s GDP was 1.1% for JFY 2002 and 3.2% for JFY 2003, and Japan’s nominal GDP also grew by 0.7% for JFY 2003. There are uncertainties, however, in the current outlook for Japan’s economy, particularly in light of the persistent deflationary pressure, a large amount of non-performing loans and a severe employment environment.

Economic Policies

     In recent years, the Japanese Government has implemented a series of policies intended to stimulate the Japanese economy, including fiscal stimulus packages, looser monetary policy, structural reform efforts, assistance to financial institutions and monitoring of the exchange rate between the yen and the United States dollar and other currencies.

     In June 2001, the Japanese Government proposed a new policy package entitled “Structural Reform of The Japanese Economy: Basic Policies for Macroeconomic Management”, and is continuing to carry out economic and fiscal structural reforms. Additional economic recovery programs were established during JFY 2001 in order to support the policy package.

     The Japanese Government’s structural reform efforts continued in JFY 2002, including the following:

•   June 2002. The government announced the “Basic Policies for Economic and Fiscal Policy Management and Structural Reform 2002”, focusing on reform in the areas of tax and government expenditures as well as deregulation for potential high growth sectors. This reform was launched in an effort to restore fiscal primary balance and to reallocate economic resources, and in turn, to establish a more competitive economic system suitable for the 21st century.
 
•   October 2002. The Japanese Government compiled its “Comprehensive Measures to Accelerate Reforms” to strengthen policies designed to revitalize the Japanese economy.
 
•   December 2002. The Japanese Government implemented the “Program to Accelerate Reforms”, which supplements and bolsters the “Comprehensive Measures to Accelerate Reforms”, announced in October 2002. The Japanese Government also began to privatize special public corporations pursuant to the “Reorganization and Rationalization Plan for Special Public Corporations”.

-6-

 

•   January 2003. Concluding that deflation and non-performing loans are the two problems that most urgently need to be addressed, the Japanese Government issued “Reform and Perspectives — FY2002 Revision”, which sets forth a revised policy that builds on previous policy packages to accelerate structural reforms. One of the Japanese Government’s aims, according to this policy, is to hold the ratio of its general expenditures to GDP at or below the ratio for JFY2002 through FY2006 and achieve a surplus in the primary balance in the early 2010s.

     Based on an evaluation of the progress of structural reform, the Japanese Government issued the “Basic Policies for Economic and Fiscal Management and Structural Reform 2003” in June 2003. These basic policies set out seven reforms: regulatory reform and establishment of special structural reform zones; reform to direct funds to the private sector as well as financial and industrial revitalization; tax reform; employment and human resource strategy; reform of the social security system; reform of central and local governments; and reform of the budget formulation process. In line with these basic policies, the Japanese Government has undertaken further structural efforts in JFY 2003, including the following:

•   efforts aimed to eliminate the problem of non-performing loans by JFY 2004,
 
•   establishment of more than 300 special zones for structural reform for such purposes as promotion of services dedicated to the betterment of individuals’ lives and creation of new business opportunities
 
•   a major job creation program,
 
•   a program for the promotion of foreign direct investment into Japan,
 
•   formulation of Measures to Reform and Vitalize the Securities Market in May 2003,
 
•   use of the Industrial Revitalization Corporation to support viable but struggling companies, following the enactment of the Industrial Revitalization Corporation Law in April 2003, and
 
•   capital infusion or public management of certain formerly private banks to prevent financial crises.

-7-

 

Gross Domestic Product and National Income

     The following table sets forth information pertaining to Japan’s gross domestic product for JFY 1999 through JFY 2003.

     In December 2002, Japan released revised GDP data for JFY 1990 through to JFY 2001 and in December 2003, Japan announced further revised GDP data for JFY 1980 through JFY 2002. Both revisions were due to the implementation by Japan of a new valuation method for calculating national accounts known as “93NSA”. The following data reflect the December 2003 revisions.

Gross Domestic Product

                                                 
                                            Percentage
                                            of JFY
    JFY   JFY   JFY   JFY   JFY   2003
    1999
   2000
   2001(b)
   2002(b)
   2003(b)
   GDP
    (yen amounts in billions)        
Total Consumption
                                                
Private sectors
   ¥ 286,826     ¥ 285,993     ¥ 285,182     ¥ 284,650     ¥ 284,447       56.7 %
Public sectors
     81,450       84,903       86,986       87,403       86,926       17.3  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     368,276       370,896       372,168       372,053       371,373       74.0  
Total Gross Capital Formation
                                                
Private sectors
                                                
Producers’ Durable Equipment
     75,615       80,635       75,947       71,489       75,840       15.1  
Residential Construction
     20,431       20,310       18,496       17,895       17,949       3.6  
Public sectors
     37,587       34,374       32,045       30,027       26,029       5.2  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     133,633       135,319       126,488       119,411       119,818       23.9  
Additions to Business Inventories
                                                
Private sectors
     (1,803 )     683       (1,519 )     39       1,061       0.2  
Public sectors
     66       116       (44 )     (16 )     (76 )     (0.0 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     (1,737 )     799       (1,563 )     23       985       0.2  
Net Exports of Goods and Services
     7,829       6,196       3,869       6,197       9,176       1.8  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Gross Domestic Product (=GDE)
                                                
Current Prices
   ¥ 508,000     ¥ 513,209     ¥ 500,963     ¥ 497,684     ¥ 501,351       100.0 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Gross Domestic Product (=GDE)
                                                
Constant Prices(a)
   ¥ 520,937     ¥ 536,806     ¥ 530,456     ¥ 536,549     ¥ 553,634          
 
    
 		      
 		      
 		      
 		      
 		          
Surplus of the Nation on Current Account
                                                
Exports of Goods and Services and Other Receipts from Abroad
     11,142       12,198       13,716       12,518       12,748          
Less: Imports of Goods and Services and Other Payments Abroad
     (4,802 )     (5,248 )     (5,174 )     (4,477 )     (3,993 )        
 
    
 		      
 		      
 		      
 		      
 		          
 
     6,340       6,950       8,542       8,041       8,755          
 
    
 		      
 		      
 		      
 		      
 		          
Gross National Income
   ¥ 514,340     ¥ 520,159     ¥ 509,505     ¥ 505,725     ¥ 510,106          
Percentage Changes of GDP from Previous Year
                                                
At Current Prices
     -0.9 %     1.0       -2.4 %     -0.7 %     0.7 %        
At Constant Prices(a)
     0.9       3.0       -1.2       1.1       3.2          
Deflator
     -1.7       -2.0       -1.2       -1.8       -2.4          

(a)   Constant prices are based on calendar year 1995.
 
(b)   Data of JFY 2001, 2002 and 2003 are provisional.
 
Source:   Economic and Social Research Institute, Cabinet Office.

-8-

 

     The following table sets forth information pertaining to Japan’s gross domestic product, as seasonally adjusted, for each quarter of JFY 2002 and 2003.

Quarterly Gross Domestic Product(a)

                                                                 
    JFY 2002
   JFY 2003
    First   Second   Third   Fourth   First   Second   Third   Fourth
    Quarter
   Quarter
   Quarter
   Quarter
   Quarter
   Quarter
   Quarter
   Quarter
    (yen amounts in billions)
Gross Domestic Product at Current Prices
   ¥ 497,633     ¥ 500,460     ¥ 498,322     ¥ 494,780     ¥ 497,491     ¥ 498,430     ¥ 501,758     ¥ 506,880  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Gross Domestic Product at Constant Prices(b)
   ¥ 531,844     ¥ 537,301     ¥ 538,181     ¥ 538,481     ¥ 543,530     ¥ 547,138     ¥ 556,885     ¥ 565,237  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Percentage Changes of GDP from Corresponding Quarter of Previous Year(c)
                                                                
At Current Prices
     -1.8 %     -0.3 %     -0.0       -0.5 %     0.0 %     -0.3 %     0.3 %     3.0 %
At Constant Prices(b)
     -0.8       1.0       1.7       2.7       2.1       1.9       3.1       5.6  
Deflator
     -1.0       -1.3       -1.7       -3.1       -2.0       -2.1       -2.7       -2.6  

(a)   All data are provisional.
 
(b)   Constant prices are based on calendar year 1995.
 
(c)   Data for JFY 2001 were recalculated using the new valuation method applied after April 2002.
 
Source:   Economic and Social Research Institute, Cabinet Office.

     The following table sets forth national income for JFY 1998 through JFY 2002.

National Income

                                         
    JFY   JFY   JFY   JFY   JFY
    1998
   1999
   2000
   2001
   2002
    (yen amounts in billions)
Domestic Factor Income
   ¥ 378,554     ¥ 372,693     ¥ 378,392     ¥ 367,730     ¥ 362,850  
Net Income from Abroad
     6,854       6,340       6,950       8,542       8,041  
 
    
 		      
 		      
 		      
 		      
 		  
National Income at Current Prices
   ¥ 385,408     ¥ 379,033     ¥ 385,342     ¥ 376,272     ¥ 370,891  
 
    
 		      
 		      
 		      
 		      
 		  
Percentage Changes of Income at Current Prices from Previous Fiscal Year
     -3.0 %     -1.7 %     1.7 %     -2.4 %     -1.4 %

Source: Economic and Social Research Institute, Cabinet Office.

-9-

 

Industry

     The following table sets forth the proportion of gross domestic product contributed by major industrial sectors of the economy for 1998 through 2002. These figures have been revised to reflect the new method for calculating GDP, as discussed above.

GDP by Industrial Sectors (at current prices)

                                         
    1998
   1999
   2000
   2001
   2002
Industry
                                        
Agriculture, Forestry and Fisheries
     1.6 %     1.5 %     1.4 %     1.3 %     1.3 %
Mining
     0.1       0.1       0.1       0.1       0.1  
Manufacturing
     22.0       21.9       21.9       20.8       20.5  
Construction
     7.7       7.6       7.4       7.2       6.9  
Electric Power Generation, Gas and Water
     2.8       2.8       2.8       2.9       2.8  
Wholesale and Retail Trade
     15.0       14.4       13.7       13.7       13.7  
Finance and Insurance
     5.7       6.0       6.1       6.6       6.8  
Real Estate
     12.5       12.8       13.0       13.3       13.7  
Transportation and Communication
     6.7       6.5       6.4       6.5       6.3  
Services
     19.4       19.9       20.3       20.5       20.8  
 
    
 		      
 		      
 		      
 		      
 		  
Total
     93.7       93.5       93.1       92.9       93.1  
Public Services
                                        
Electric Power Generation, Gas and Water
     0.8       0.9       0.9       1.0       1.0  
Services
     2.6       2.7       2.7       2.7       2.7  
Public Administration
     4.9       5.1       5.1       5.3       5.5  
 
    
 		      
 		      
 		      
 		      
 		  
Total
     8.4       8.6       8.7       9.0       9.2  
Non-Profit Services
     2.0       2.0       1.8       1.9       2.0  
 
    
 		      
 		      
 		      
 		      
 		  
Total
     104.0 %     104.1 %     103.6 %     103.7 %     104.3 %
 
    
 		      
 		      
 		      
 		      
 		  

Source: Economic and Social Research Institute, Cabinet Office, Annual Report on National Accounts.

Energy

     The following table sets forth the total amounts of primary energy supplied and the percentages supplied by different sources for JFY 1998 through JFY 2002.

                                                 
    Total Primary   Sources of Primary Energy Supplied
    Energy Supplied                    
JFY
   (peta-joule)
   Oil
   Coal
   Nuclear
   Natural Gas
   Other
1998
     22,945       51.6       16.3       13.6       12.2       6.2  
1999
     23,141       51.2       17.2       12.9       12.6       6.0  
2000
     23,537       51.0       17.8       12.3       13.1       5.8  
2001
     22,867       49.2       19.0       12.6       13.4       5.8  
2002
     22,977       49.7       19.5       11.6       13.5       5.7  

Source: Agency of Natural Resources and Energy, Ministry of Economy, Trade and Industry.

     The table below sets forth information regarding crude oil imports for JFY 1999 through JFY 2003.

                                         
    JFY   JFY   JFY   JFY   JFY
    1999
   2000
   2001
   2002
   2003
Volume of imports (thousand kilo-liters per day)
     686       689       652       671       669  
Cost of imports (c.i.f. in billions of yen)
   ¥ 3,644     ¥ 4,931     ¥ 4,435     ¥ 5,150     ¥ 5,132  
Average price (c.i.f. in yen kilo-liters)
   ¥ 14,518     ¥ 19,617     ¥ 18,645     ¥ 21,034     ¥ 20,955  

Source: Customs and Tariff Bureau, Ministry of Finance.

-10-

 

     Japan has historically depended on oil for most of its energy requirements and almost all its oil is imported, mostly from the Middle East. Oil price movements thus have a major impact on the domestic economy. Recently, as the geopolitical tension in the Middle East worsened and culminated in war in Iraq, crude oil prices increased significantly. While crude oil prices began to decrease for a few months after March 2003, they have been rising since June 2003.

     Japan has worked to reduce its dependence on oil by encouraging energy conservation and the use of alternative fuels. In addition, a restructuring of industry, with emphasis shifting from primary industries to processing and assembly type industries and from manufacturing industry to service industry, has also contributed to the reduction of oil consumption.

     The following table sets forth information relating to total electric power generating capacity and electric power generation for JFY 1998 through JFY 2002.

                                         
    JFY   JFY   JFY   JFY   JFY
    1998
   1999
   2000
   2001
   2002
Electric power generating capacity(a):   (megawatts)
Fossil Fuel
     159,054       161,869       166,648       168,729       172,889  
Nuclear
     45,248       45,248       45,248       45,907       45,907  
Hydro-electric
     45,382       45,860       46,325       46,387       46,545  
Other
     606       567       617       708       787  
 
    
 		      
 		      
 		      
 		      
 		  
Total
     250,290       253,544       258,838       261,730       266,129  
 
    
 		      
 		      
 		      
 		      
 		  
Electric power generation:   (thousands of megawatt-hours)
Fossil Fuel
     607,815       650,448       669,177       658,475       706,482  
Nuclear
     332,343       316,616       322,050       319,859       295,095  
Hydro-electric
     102,587       95,577       96,817       93,872       91,801  
Other
     3,543       3,488       3,457       3,683       3,789  
 
    
 		      
 		      
 		      
 		      
 		  
Total
     1,046,288       1,066,130       1,091,500       1,075,890       1,097,167  
 
    
 		      
 		      
 		      
 		      
 		  

(a)   At the end of fiscal year — March 31.
 
Source: Handbook of Electric Power Industry, Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry.

Price Indices

     The table below sets forth information concerning changes in Japan’s wholesale and consumer price indices for the periods indicated.

                                 
    Corporate Goods   Consumer Price
    Price Index(a)
   Index(b)
            Annual           Annual
    Index
   % Change
   Index
   % Change
1999
     100.0       -1.5       100.7       -0.3  
2000
     100.0       0.0       100.0       -0.7  
2001
     97.7       -2.3       99.3       -0.7  
2002
     95.7       -2.0       98.4       -0.9  
2003
     95.0       -0.7       98.1       -0.3  

(a)   All commodities. Calendar year 2000=100. Source: Domestic Corporate Goods Price Index, Bank of Japan.
 
(b)   General index. Calendar year 2000=100. Source: Consumer Price Index, Statistics Bureau & Statistics Center, Ministry of Public Management, Home Affairs, Posts and Telecommunications.
 
(c)   Indices are calculated using the monthly averages.

-11-

 

Labor

     Japan’s labor force (seasonally adjusted) expanded steadily until 1998 but has been decreasing since 1999. In 2002, average employment (seasonally adjusted) was estimated at 63.3 million, including 4.7% employed in agriculture, forestry and fisheries, 29.1% in mining, manufacturing and construction and 65.3% in services and other sectors. In 2003, average employment (seasonally adjusted) was estimated at 63.1 million, including 4.6% employed in agriculture, forestry and fisheries, 28.3% in industry and 67.0% in services and other sectors. The unemployment rate (seasonally adjusted) in Japan has gradually increased since 1993 and it ranged between 4.9% and 5.5% during 2003. The unemployment rate for the beginning of 2004 was 5.0% for January, 5.0% for February and 4.7% for March, the most recent three months for which statistics are available.

     The table below sets forth information regarding wage index (total cash earnings (nominal)) and industrial production index (manufacturing and mining) for the periods indicated.

                                 
                    Industrial
    Wage Index(a)
   Production Index(b)
            Annual           Annual
    Index
   % Change
   Index
   % Change
1999
     99.9       -1.5       94.6       0.2  
2000
     100.0       0.1       100.0       5.7  
2001
     98.5       -1.5       93.2       -6.8  
2002
     95.6       -2.9       92.0       -1.3  
2003
     94.8       -0.8       95.0       3.3  

(a)   Calendar year 2000=100. Source: Monthly Labour Survey, Ministry of Health, Labour and Welfare.
 
(b)   Calendar year 2000=100. Source: Ministry of Economy, Trade and Industry.
 
(c)   Indices are calculated using the monthly averages.

-12-

 

FOREIGN TRADE AND BALANCE OF PAYMENTS

Foreign Trade

     Japan is one of the leading trading nations of the world, ranking third to Germany and the United States in merchandise exports and ranking sixth in merchandise imports among the IMF member countries in 2003.

     In 1999, Japan’s trade surplus decreased to ¥12,280 billion since exports decreased at a higher rate than imports. Both imports and exports increased in 2000, and the trade surplus declined further to ¥10,716 billion as imports grew faster than exports. In 2001, the trade surplus declined further to ¥6,564 billion due to a decrease in exports and an increase in imports, but in 2002 the trade surplus rebounded to ¥9,881 billion, as exports increased while imports decreased slightly. In 2003, the trade surplus increased further, as exports grew while imports decreased.

     The following tables set forth information relating to foreign trade for the years indicated. In these tables exports are stated on an f.o.b. basis and imports on a c.i.f. basis. Monetary figures are based on actual movements of goods as calculated by the Ministry of Finance. (This method of computation differs from that used in calculating balance of payments, in which both exports and imports are stated on an f.o.b. basis.)

Foreign Trade of Japan

                                                         
    Value Index(a)
   Quantum Index(a)
   Unit Value(a) Index
   Terms of
Trade(b)
    Exports
   Imports
   Exports
   Imports
   Exports
   Imports
   Index
1999
     92.1       86.1       91.4       90.1       100.7       95.6       105.4  
2000
     100.0       100.0       100.0       100.0       100.0       100.0       100.0  
2001
     94.8       103.6       90.5       98.0       104.7       105.7       99.1  
2002
     100.9       103.1       97.7       100.0       103.2       103.2       100.1  
2003
     105.6       108.4       102.5       107.1       103.0       101.2       101.8  

(a)   Calendar year 2000=100.
 
(b)   Unit value index of exports divided by unit value index of imports, multiplied by 100.
 
Source: Japan Tariff Association, Ministry of Finance.

-13-

 

Composition of Japan’s Exports and Imports

                                                                                                 
    1998
   1999
   2000
   2001
   2002
   2003
    (yen amounts in billions)
JAPAN’S EXPORTS
                                                                                                
Textile Products
   ¥ 957       1.9 %   ¥ 900       1.9 %   ¥ 915       1.8 %   ¥ 916       1.9 %   ¥ 918       1.8 %   ¥ 900       1.7 %
Metals and Metal Products
     3,209       6.3       2,711       5.7       2,852       5.5       2,889       5.9       3,227       6.2       3,388       6.2  
Machinery and Equipment:
                                                                                                
Ships
     1,289       2.5       1,058       2.2       1,052       2.0       1,003       2.0       1,124       2.2       1,101       2.0  
Motor Vehicles
     7,795       15.4       7,095       14.9       6,930       13.4       7,211       14.7       8,775       16.8       8,895       16.3  
TV and Radio Receivers
     485       1.0       431       0.9       480       0.9       484       1.0       569       1.1       584       1.1  
Motorcycles
     587       1.2       526       1.1       562       1.1       574       1.2       561       1.1       533       1.0  
Scientific and Optical Instruments
     2,141       4.2       2,241       4.7       2,626       5.1       2,504       5.1       1,897       3.6       2,038       3.7  
Other
     24,960       49.3       23,562       49.6       26,717       51.7       23,749       48.5       24,616       47.2       26,146       47.9  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total Machinery and Equipment
     37,257       73.6       34,913       73.4       38,367       74.3       35,525       72.5       37,542       72.0       39,297       72.0  
Chemicals
     3,556       7.0       3,503       7.4       3,805       7.4       3,739       7.6       4,174       8.0       4,525       8.3  
Foods and Beverages
     261       0.5       239       0.5       227       0.4       364       0.7       269       0.5       267       0.5  
Other Exports
     5,405       10.7       5,281       11.1       5,488       10.6       5,546       11.3       5,979       11.5       6,171       11.3  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Grand Total
   ¥ 50,645       100.0 %   ¥ 47,548       100.0 %   ¥ 51,654       100.0 %   ¥ 48,979       100.0 %   ¥ 52,109       100.0 %   ¥ 54,548       100.0 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
JAPAN’S IMPORTS
                                                                                                
Foods and Beverages
   ¥ 5,411       14.8 %   ¥ 5,040       14.3     ¥ 4,966       12.1 %   ¥ 5,251       12.4 %   ¥ 5,282       12.5 %     5,105       11.5  
Raw Materials
     2,868       7.8       2,551       7.2       2,642       6.5       2,586       6.1       2,522       6.0       2,659       6.0  
Chemicals
     2,726       7.4       2,637       7.5       2,855       7.0       3,101       7.3       3,239       7.7       3,458       7.8  
Mineral Fuels:
                                                                                                
Petroleum
     2,930       8.0       3,040       8.6       4,819       11.8       4,718       11.1       4,573       10.8       5,328       12.0  
Coal
     801       2.2       620       1.8       583       1.4       753       1.8       786       1.9       744       1.7  
Other
     1,892       5.2       1,986       5.6       2,915       7.1       3,053       7.2       2,815       6.7       3,278       7.4  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total Mineral Fuel
     5,623       15.3       5,646       16.0       8,317       20.3       8,524       20.1       8,174       19.4       9,350       21.1  
Machinery and Equipment
     11,172       30.5       11,045       31.3       12,924       31.6       13,216       31.2       13,434       31.8       13,974       31.5  
Other Imports
     8,854       24.2       8,349       23.7       9,234       22.6       9,738       23.0       9,576       22.6       9,817       22.1  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Grand Total
   ¥ 36,654       100.0 %   ¥ 35,268       100.0 %   ¥ 40,938       100.0 %   ¥ 42,416       100.0 %   ¥ 42,228       100.0 %   ¥ 44,362       100.0 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

Source: The Summary Report on Trade of Japan, Japan Tariff Association, Ministry of Finance.

-14-

 

Geographic Distribution of Japan’s Exports and Imports

                                                                                 
    1999
   2000
   2001
   2002
   2003
JAPAN’S EXPORTS
                                                                                
Asia
   ¥ 17,694       37.2 %   ¥ 21,254       41.1 %   ¥ 19,732       40.3 %   ¥ 22,439       43.1 %   ¥ 25,318       46.4 %
China
     2,657       5.6       3,274       6.3       3,764       7.7       4,980       9.6       6,635       12.2  
(Asia NIES)
     10,244       21.5       12,356       23.9       10,626       21.7       11,805       22.7       12,803       23.5  
(ASEAN)
     6,170       13.0       7,381       14.3       6,592       13.5       6,970       13.4       7,080       13.0  
Oceania
     1,206       2.5       1,110       2.1       1,131       2.3       1,278       2.5       1,416       2.6  
Australia
     962       2.0       924       1.8       933       1.9       1,039       2.0       1,147       2.1  
North America
     15,394       32.4       16,162       31.3       15,509       31.7       15,791       30.3       14,267       26.2  
U.S.A.
     14,605       30.7       15,356       29.7       14,711       30.0       14,873       28.5       13,412       24.6  
Canada
     789       1.7       806       1.6       797       1.6       918       1.8       855       1.6  
Central and South America
     2,216       4.7       2,265       4.4       2,168       4.4       2,036       3.9       1,930       3.5  
Western Europe
     9,068       19.1       9,000       17.4       8,326       17.0       8,164       15.7       8,929       16.4  
EU
     8,462       17.8       8,432       16.3       7,810       15.9       7,663       14.7       8,351       15.3  
Central and Eastern Europe, Russia etc.
     230       0.5       271       0.5       297       0.6       364       0.7       554       1.0  
Russia
     55       0.1       61       0.1       87       0.2       118       0.2       204       0.4  
Middle East
     1,113       2.3       1,047       2.0       1,277       2.6       1,423       2.7       1,489       2.7  
Africa
     626       1.3       544       1.1       538       1.1       614       1.2       645       1.2  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total
   ¥ 47,548       100.0 %   ¥ 51,654       100.0 %   ¥ 48,979       100.0 %   ¥ 52,109       100.0 %   ¥ 54,548       100.0 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
JAPAN’S IMPORTS
                                                                                
Asia
   ¥ 13,970       39.6 %   ¥ 17,063       41.7 %   ¥ 17,987       42.4 %   ¥ 18,358       43.5 %   ¥ 19,727       44.5 %
China
     4,875       13.8       5,941       14.5       7,027       16.6       7,728       18.3       8,731       19.7  
(Asia NIES)
     4,102       11.6       5,008       12.2       4,642       10.9       4,440       10.5       4,512       10.2  
(ASEAN)
     5,259       14.9       6,424       15.7       6,604       15.6       6,465       15.3       6,780       15.3  
Oceania
     1,767       5.0       1,929       4.7       2,090       4.9       2,074       4.9       2,068       4.7  
Australia
     1,457       4.1       1,596       3.9       1,756       4.1       1,753       4.2       1,744       3.9  
North America
     8,551       24.2       8,728       21.3       8,622       20.3       8,140       19.3       7,704       17.4  
U.S.A.
     7,640       21.7       7,779       19.0       7,671       18.1       7,237       17.1       6,825       15.4  
Canada
     900       2.6       938       2.3       941       2.2       895       2.1       871       2.0  
Central and South America
     1,101       3.1       1,183       2.9       1,178       2.8       1,198       2.8       1,210       2.7  
Western Europe
     5,436       15.4       5,567       13.6       5,981       14.1       6,081       14.4       6,322       14.3  
EU
     4,862       13.8       5,043       12.3       5,412       12.8       5,482       13.0       5,670       12.8  
Central and Eastern Europe, Russia etc.
     527       1.5       624       1.5       623       1.5       570       1.3       653       1.5  
Russia
     429       1.2       494       1.2       468       1.1       410       1.0       490       1.1  
Middle East
     3,450       9.8       5,310       13.0       5,384       12.7       5,095       12.1       5,928       13.4  
Africa
     465       1.3       535       1.3       551       1.3       710       1.7       749       1.7  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total
   ¥ 35,268       100.0 %   ¥ 40,938       100.0 %   ¥ 42,416       100.0 %   ¥ 42,228       100.0 %   ¥ 44,362       100.0 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

Source: The Summary Report on Trade of Japan, Japan Tariff Association, Ministry of Finance.

-15-

 

Balance of Payments

     In 1999, Japan registered a surplus of ¥13,052 billion in the Current Account primarily as a result of a surplus of ¥14,016 billion in Trade Balance. In 2000, the Current Account surplus slightly decreased to ¥12,876 billion, primarily due to a decrease in the Trade Balance surplus partially offset by a decrease in the deficit in Services. In 2001, the Current Account surplus decreased to ¥10,652 billion, principally due to a decrease in Exports and an increase in Imports. In 2002, however, the Current Account surplus rebounded to ¥14,140 billion, as Exports increased while Imports slightly decreased. In 2003, the Current Account surplus increased to ¥15,767 billion, primarily due to an increase in the Trade Balance and a decrease in the deficit in Services.

Balance of Payments of Japan

                                         
    1999
   2000
   2001
   2002
   2003
Current Account
   ¥ 13,052     ¥ 12,876     ¥ 10,652     ¥ 14,140     ¥ 15,767  
Balance on Goods and Services
     7,865       7,430       3,212       6,469       8,355  
Trade Balance
     14,016       12,563       8,527       11,733       12,260  
Exports (f.o.b.)
     45,795       49,526       46,584       49,480       51,934  
Imports (f.o.b.)
     31,779       36,962       38,056       37,746       39,675  
Services
     (6,151 )     (5,134 )     (5,315 )     (5,264 )     (3,904 )
Income
     6,574       6,505       8,401       8,267       8,281  
Current Transfers
     (1,387 )     (1,060 )     (960 )     (596 )     (870 )
Capital and Financial Account(a).
     (6,274 )     (9,423 )     (6,173 )     (8,478 )     7,734  
Balance on Financial Account.
     (4,366 )     (8,429 )     (5,826 )     (8,056 )     8,201  
Assets
     21,331       (1,452 )     343       322       1,280  
Liabilities
     (25,697 )     (6,977 )     (6,169 )     (8,378 )     6,921  
Capital Account
     (1,909 )     (995 )     (346 )     (422 )     (467 )
Changes in Reserve Assets
     (8,796 )     (5,261 )     (4,936 )     (5,797 )     (21,529 )
Errors and Omissions
     2,018       1,809       457       135       (1,972 )

(a)   Numbers in parentheses indicate outflows of capital resulting from either increases in assets or decreases in liabilities.
 
Source: Balance of Payments Monthly, Bank of Japan.

-16-

 

Official Foreign Exchange Reserves

     The following table shows the breakdown of Japan’s official foreign exchange reserves as of the end of the years indicated.

Official Foreign Exchange Reserves(a)

                                         
As of December 31,
   Gold(b)
   Foreign
Exchange
   IMF
Reserve
Position
   Special
Drawing
Rights
   Total
                    (in millions)                
1999
   $ 1,164     $ 277,708     $ 6,552     $ 2,656     $ 288,080  
2000
     6,737       347,212       5,253       2,436       361,638  
2001
     6,803       387,727       5,051       2,378       401,959  
2002
     8,542       451,458       7,203       2,525       469,728  
2003
     10,241       652,790       7,733       2,765       673,529  

(a)   The foreign exchange reserves, which are officially recorded in U.S. dollars by the Ministry of Finance, do not include: (i) net balance of bilateral accounts between the Bank of Japan and foreign central banks, and (ii) foreign exchange holdings of commercial banks.
 
(b)   Until 1999, gold was valued at SDR 35 per ounce. Since 2000, the valuation of gold has been changed to reflect marked-to- market values.
 
Source: International Reserves/Foreign Currency Liquidity, Ministry of Finance.

Foreign Exchange Rates

     The following table sets forth the high, low and average daily interbank rate for the U.S. dollar in the Tokyo foreign exchange market for the years indicated.

                                         
    1999
   2000
   2001
   2002
   2003
Average (Central Rate)
   ¥ 113.94     ¥ 107.78     ¥ 121.58     ¥ 125.14     ¥ 115.94  
High
     124.75       114.98       132.08       135.04       121.48  
Low
     101.35       101.46       113.57       115.63       106.93  

Source: Foreign Exchange, Bank of Japan.

-17-

 

FINANCIAL SYSTEM

The Bank of Japan and Monetary Policy

     The Bank of Japan, with 55% of its capital owned by the Government, is the central bank and sole bank of issue, as well as the depository and fiscal agent for the Government. As of April 30, 2004, the Bank of Japan had total assets of ¥138,251 billion.

     In addition to issuing bank notes, the Bank of Japan executes monetary policy by adjusting the official discount rate and deposit reserve requirements and through its open market operations. In recent years, the Bank of Japan has implemented a policy of quantitative monetary easing by conducting money market operations to adjust the outstanding balance of the current accounts at the Bank. For example, in January 2004, the Bank of Japan’s policy board, headed by Governor Toshihiko Fukui, voted to raise the amount of the outstanding current accounts that private financial institutions may hold at the Bank of Japan to between ¥30 trillion and ¥35 trillion, from the previous range of between ¥27 trillion to ¥32 trillion.

     The following table sets forth the principal economic indicators relating to monetary policy from 1999 through 2003.

                                                                         
    Current                   Monetary Base                   Loan and Discounts
    Account   Discount Rate   Average Amounts                   Domestically Licensed
    Balance
   (a)
   Outstanding
   Money (Stock)(b)
   Banks
                                    Annual           Annual           Annual
            High
   Low
   Total
   % Change
   Total(c)
   % Change
   Total(d)
   % Change
    (yen amounts in billions)
1999
   ¥ 4,819       0.50 %     0.50 %   ¥ 59,938       7.3 %   ¥ 616,265       3.6 %   ¥ 468,810       -4.1 %
2000
     5,538       0.50       0.50       64,508       7.6       629,284       2.1       463,916       -1.0  
2001
     6,361       0.50       0.10       69,302       7.4       646,803       2.8       448,223       -3.4  
2002
     16,387       0.10       0.10       87,111       25.7       668,197       3.3       431,643       -3.7  
2003
     26,991       0.10       0.10       101,429       16.4       679,553       1.7       413,853       -4.1  

(a)   Bank of Japan basic discount rate (the “official discount rate”).
 
(b)   Cash and demand, savings and time deposits, generally referred to as “M2 plus CD”.
 
(c)   Average amounts outstanding.
 
(d)   At the end of each calendar year indicated.
 
Source:   Financial and Economic Statistics Monthly, Bank of Japan.

Government Financial Institutions

     The activities of private institutions are supplemented by a number of financial institutions under Government supervision, whose senior officials are appointed or approved by the Government and whose funds are supplied principally by the Government. Among these are the Development Bank of Japan whose main purpose is to supplement and encourage the credit operation of ordinary financial institutions, and Japan Bank for International Cooperation whose main purpose is to contribute to the sound development of Japan and the international economy through lending and other activities. They also include Shoko Chukin Bank, Japan Finance Corporation for Municipal Enterprises, National Life Finance Corporation, The Government Housing Loan Corporation, Agriculture, Forestry and Fisheries Finance Corporation, The Okinawa Development Finance Corporation, and Japan Finance Corporation for Small and Medium Enterprise, whose purposes are to supplement private financing in their respective fields of activity.

Private Financial Institutions

     According to the Financial Service Agency, the private banking system included six city banks, as of April 22, 2004, and 114 local banks (including the Saitama Resona Bank), as of May 1, 2004, whose business corresponds roughly to that of commercial banks in the United States, as well as five major trust banks. In addition, one long-term credit bank mainly supplies long-term funds to industry for expenditures on plant and equipment.

-18-

 

     There are also credit associations, credit cooperative associations, labor credit associations and the national federations of each of such associations, which are engaged mainly in making small business loans. Agriculture cooperatives, prefectural credit federations of such cooperatives and The Norinchukin Bank operate in the field of agricultural credit.

GOVERNMENT FINANCE

Revenues, Expenditures and Budgets

     The responsibility for the preparation of the budget and the administration of Government finances rests with the Ministry of Finance. The fiscal year commences on April 1, and the Cabinet usually submits the budget to the Diet for its decision in the preceding January. Supplementary budgets revising the original budget may be submitted to the Diet from time to time during the fiscal year.

     The Japanese Government’s JFY 2004 budget reflects four concepts:

  •   Structural Reform: Measures include reform of the financial relationship between the central and local governments, reform of the pension system and reform of the national health insurance system.
 
  •   Improvement of Efficiency: Measures include expansive review of uses of budgets on public projects, review of special accounts, cost reduction efforts and reduction of the number of civil servants.
 
  •   Prioritization for Vitality and Security. Measures include contribution to progress in science and technology, prioritization of public investments, contribution to domestic and international security and contribution to employment.
 
  •   Restraint in the Issuance of Government Bonds. Measures include maintaining the same level of bond dependency, measured as a percentage of general account total revenues.

     Based on the above concepts, the JFY 2004 budget sets the general account total expenditures at a level lower than the provisional general account total expenditures for JFY 2003.

     The fiscal and financial operations of the Government and its agencies are budgeted and recorded in the following three sets of accounts:

  •   General Account. The General Account is used primarily to record operations in traditional areas of governmental activity.

  •   Special Accounts. Special Accounts are set up for certain Government functions to achieve more effective budgetary control and administration. Special Accounts can be generally classified as follows: (i) Government activities of a specialized nature such as postal services, postal savings, national forest services and road improvement, (ii) control programs under which certain items such as foodstuffs and foreign exchange are bought, financed and sold, (iii) insurance funds which transact all Government insurance business, including welfare insurance, labor insurance and postal life insurance, (iv) investment accounts which invest in various loans and securities, including obligations of the Government and Government Affiliated Agencies, and (v) other special accounts such as the Government Bonds Consolidation Fund.

  •   Government Affiliated Agencies. Government Affiliated Agencies are Government-owned corporations which consist of seven financial corporations and two special banks.

     The settlement of accounts for revenues and expenditures is made by the Ministry of Finance, based on reports submitted by the respective Ministers. The settlement of accounts is required by law to be audited annually in detail by the Board of Audit, an organ independent of the Cabinet, and submitted by the Cabinet to the Diet in the following fiscal year.

-19-

 

     The following tables set forth information with respect to the General Account, the Special Accounts and the Government Affiliated Agencies for JFY 1999 through JFY 2002, the provisional results or budget for JFY 2003 and the budget for JFY 2004.

Summary of Consolidated General and Special Accounts(a)

                                                 
                                    JFY    
                                    2003    
                                    (Provisional   JFY
    JFY   JFY   JFY   JFY   results as of   2004
    1999
   2000
   2001
   2002
   December 31, 2003)
   Budget
    (in billions)
REVENUES
                                                
Total Revenues, General Account
   ¥ 94,376     ¥ 93,361     ¥ 86,903     ¥ 87,289     ¥ 85,204     ¥ 82,111  
Total Revenues, Special Accounts
     310,176       341,146       396,224       399,746       390,018       407,621  
Less: Inter-Account Transactions(b)
     170,763       199,838       207,400       219,958       221,547       228,504  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total Consolidated Revenues
   ¥ 233,789     ¥ 234,670     ¥ 275,727     ¥ 267,077     ¥ 253,675     ¥ 261,228  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
EXPENDITURES
                                                
Total Expenditures, General Account
   ¥ 89,037     ¥ 89,321     ¥ 84,811     ¥ 83,674     ¥ 85,158     ¥ 82,111  
Total Expenditures, Special Accounts
     279,369       305,776       363,337       373,898       366,697       387,410  
Less: Inter-Account Transactions(b)
     169,643       195,631       199,805       212,196       211,047       227,085  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total Consolidated Expenditures
   ¥ 198,763     ¥ 199,466     ¥ 248,343     ¥ 245,376     ¥ 240,808     ¥ 242,435  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Surplus of Consolidated Revenues over Consolidated Expenditures
   ¥ 35,026     ¥ 35,204     ¥ 27,384     ¥ 21,701     ¥ 12,867     ¥ 18,793  

(a)   Because of the manner in which the Government accounts are kept, it is not practicable to show a consolidation of the Government Affiliated Agencies with the General and Special Accounts.
 
(b)   Inter-Account Transactions include transfers between the General Account and the Special Accounts, transfers between the Special Accounts, and transfers between sub-accounts of the Special Accounts.
 
Source:   Budget, Ministry of Finance.

-20-

 

General Account

                                                 
                                    JFY   JFY
    JFY   JFY   JFY   JFY   2003 Budget   2004
    1999
   2000
   2001
   2002
   (Revised (c))
   (Initial budget)
    (in billions)
REVENUES
                                                
Tax and Stamp Revenues
   ¥ 47,234     ¥ 50,712     ¥ 47,948     ¥ 43,833     ¥ 41,786     ¥ 41,747  
Carried-over Surplus
     5,391       5,339       4,040       2,092       387       0  
Government Bond Issues
     37,514       33,004       30,000       34,968       36,445       36,590  
Miscellaneous Receipts
     4,237       4,306       4,915       6,396       3,321       3,774  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total Revenues
   ¥ 94,376     ¥ 93,361     ¥ 86,903     ¥ 87,289     ¥ 81,940     ¥ 82,111  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
EXPENDITURES
                                                
Local Allocation Tax Grants, etc.
   ¥ 13,084     ¥ 15,829     ¥ 16,706     ¥ 16,479     ¥ 17,399     ¥ 16,493  
National Debt Service
     20,272       21,446       15,829       15,600       16,082       17,569  
Social Security
     19,022       17,636       19,291       19,633       19,684       19,797  
Public Works
     12,972       11,910       10,820       9,162       8,301       7,816  
Education and Science
     6,799       6,872       6,677       6,731       6,314       6,133  
National Defense
     4,897       4,907       4,969       4,920       4,903       4,903  
Government Employee Pensions and Others
     1,485       1,418       1,350       1,282       1,203       1,132  
Economic Assistance
     1,019       1,012       961       838       944       769  
Major Foodstuff Measures
     266       247       738       735       746       675  
Energy Measures
     676       677       632       563       553       506  
Small and Medium-sized Businesses
     818       933       425       628       245       174  
Transfer to the Industrial Investment Special Account
     113       159       664       2,034       164       99  
Financial aid upon repayment of Public Investments in connection with the Structural Reform
     —       —       —       —       —       417  
Miscellaneous
     5,996       6,276       5,749       5,070       5,153       5,278  
Contingencies
     0       0       0       0       250       350  
Other Expenditures
     1,618 (a)     0       0       1 (b)     0       0  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total Expenditures
   ¥ 89,037     ¥ 89,321     ¥ 84,811     ¥ 83,674     ¥ 81,940     ¥ 82,111  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Surplus of Revenues over Expenditures
   ¥ 5,339     ¥ 4,040     ¥ 2,092     ¥ 3,615     ¥ —     ¥    

(a)   The JFY 1999 data include a reversal of funds to make up for deficits incurred in connection with the JFY 1997 settlement of accounts.
 
(b)   The JFY 2002 data include a reversal of funds to make up for deficits incurred in connection with the JFY 2001 settlement of accounts.
 
(c)   As of the date of this Annual Report on Form 18-K, the provisional results for JFY 2003 General Accounts are not available.
 
Source:   Budget, Ministry of Finance.

-21-

 

Special Accounts

                                                                                                 
                                                                    JFY    
                                                                    2003   JFY
    JFY   JFY   JFY   JFY   (Provisional results as   2004
    1999
   2000
   2001
   2002
   of December 31, 2003)
   (Initial budget)
    Rev.
   Exp.
   Rev.
   Exp.
   Rev.
   Exp.
   Rev.
   Exp.
   Rev.
   Exp.
   Rev.
   Exp.
Trust Fund Bureau
   ¥ 16,824     ¥ 14,546     ¥ 16,406     ¥ 12,879     ¥ —     ¥ —     ¥ —     ¥ —     ¥ —     ¥ —     ¥ —     ¥ —  
Fiscal Loan Program Funds
     —       —       —       —       58,453       55,544       45,027       41,418       53,631       49,966       62,533       59,284  
Government Bonds Consolidation Fund
     99,077       91,152       126,742       113,230       138,538       124,337       154,193       142,293       170,622       155,860       183,101       169,101  
Foreign Exchange Fund
     2,642       36       2,349       116       2,189       15       1,901       166       1,681       249       1,816       932  
Local Allocation and Local Transfer Tax
     44,206       43,869       54,995       53,999       61,005       60,273       64,573       63,889       67,408       66,784       68,566       68,385  
Measures for Petroleum and the Advancement of Energy Demand and Supply Structure
     1,010       528       1,097       550       1,144       621       1,013       474       1,957       1,666       2,035       1,987  
National Schools(a)
     3,230       2,907       3,157       2,872       2,974       2,854       3,293       2,985       3,035       3,027       —       —  
Welfare Insurances
     41,498       37,439       40,198       38,241       39,772       39,391       40,352       40,510       42,446       42,110       44,326       42,941  
Seamen’s Insurances
     88       94       84       87       83       86       75       79       78       78       72       72  
National Hospitals(a)
     1,147       1,070       1,148       1,087       1,078       1,059       1,034       993       1,014       1,014       —       —  
National Advanced Medical Center
     —       —       —       —       —       —       —       —       —       —       145       145  
National Pensions
     22,849       21,376       23,093       21,709       23,354       22,063       22,069       20,729       22,946       22,143       22,895       22,876  
Foodstuff Control
     4,204       4,196       4,148       4,135       4,092       4,083       3,969       3,960       3,796       3,796       3,639       3,639  
Agricultural Mutual Aid Reinsurance
     126       94       119       60       114       47       115       52       171       147       105       95  
National Forest Service
     521       501       513       505       505       500       522       512       567       570       514       514  
National Land Improvement
     649       625       658       636       620       603       611       578       656       632       509       509  
Trade Reinsurance
     167       157       139       40       192       37       242       79       266       147       230       158  
Compensation Reinsurance for Motor Vehicle Damages
     2,727       560       2,861       584       2,967       573       868       761       895       773       597       529  
Harbor Improvement
     614       582       605       555       552       510       508       482       502       497       382       382  
Airport Improvement
     554       491       525       475       559       528       516       479       516       510       472       472  
Postal Service(b)
     7,178       7,184       7,170       7,172       6,976       6,985       6,752       6,741       —       —       —       —  
Postal Savings(b)
     24,547       21,723       17,178       16,509       12,136       10,930       13,100       10,391       —       —       —       —  
Postal Life Insurance(b)
     17,163       13,307       19,247       14,021       19,030       15,087       18,218       18,218       —       —       —       —  
Labor Insurance
     8,348       7,762       8,319       7,662       8,848       8,294       8,870       8,100       8,353       7,694       8,156       7,951  
Road Construction and Improvement
     5,951       5,376       5,778       5,146       5,933       5,041       5,642       4,849       5,503       5,480       4,177       4,177  
Others
     4,856       3,794       4,617       3,504       5,110       3,876       6,280       5,159       3,976       3,554       3,352       3,260  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total Revenues and Expenditures(c)
   ¥ 310,176     ¥ 279,369     ¥ 341,146     ¥ 305,776     ¥ 396,224     ¥ 363,337     ¥ 399,746     ¥ 373,898     ¥ 390,018     ¥ 366,697     ¥ 407,621     ¥ 387,410  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

(a)   Accounts abolished after April, 1, 2004.
 
(b)   Removed from the national budget as the postal services were reorganized into a public corporation effective April 1, 2003.
 
(c)   Without adjustment for inter-account transactions. Total Revenues and Expenditures may differ from the actual totals of the listed accounts due to rounding.
 
Source:   Budget, Ministry of Finance.

Government Affiliated Agencies

                                                                                                 
                                                                    JFY   JFY
                                                                    2003   2004
    JFY   JFY   JFY   JFY   Budget   Budget
    1999
   2000
   2001
   2002
   (Revised)(a)
   (Initial)
    (in billions)
 
   Rev.   Exp.   Rev.   Exp.   Rev.   Exp.   Rev.   Exp.   Rev.   Exp.   Rev.   Exp.
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total
   ¥ 7,209     ¥ 6,920     ¥ 7,019     ¥ 6,988     ¥ 6,584     ¥ 6,628     ¥ 5,864     ¥ 5,997     ¥ 6,105     ¥ 6,108     ¥ 5,487     ¥ 5,265  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

(a)   As of the date of this Annual Report on Form 18-K, the JFY 2003 provisional results are not available.
 
Source: Budget, Ministry of Finance.    

Tax Structure

     The central government derives tax revenues through taxes on income, consumption and property. The taxes on income, consumption and property account for 53.4%, 41.5% and 5.1%, respectively, of the total central government tax revenues in the JFY 2004 budget.

     The individual income tax is progressive, with rates ranging from 10% to 37% of taxable income. Interest income is generally taxed at the rate of 20%, including both national and local taxes, separately from other types of income, and subject to certain exemptions. The corporate tax is based on a rate of 30% except that, for small and medium corporations, the first ¥8 million of income is taxed at 22%. In addition, individuals and corporations are subject to local income taxation.

-22-

 

     Currently, the consumption tax rate is 5%, including 1% for local consumption tax.

     In JFY 2003 and 2004, the Japanese Government implemented numerous tax measures intended to stimulate the Japanese economy. These measures include tax cuts in the total amount of ¥1.5 trillion in JFY 2004. Also, a new tax treaty was signed between Japan and the United States in November 2003 and became effective in March 2004, which is expected to contribute to the economic revitalization of Japan. For example, the treaty provides a significant reduction in the withholding tax rate for investment income, which includes dividends, interest and royalties.

Fiscal Investment and Loan Program (“Zaito”)

     The Fiscal Investment and Loan Program is formulated at the same pace as the General Account budget. The plan details the allocation of public funds to various special accounts, government affiliated agencies, local governments, public corporations and other public institutions.

     The Fiscal Investment and Loan Program system was fundamentally changed on April 1, 2001 from a scheme with compulsory deposit of Postal Savings and Pension Reserves into a fund-raising scheme to raise in the financial markets only the necessary amount of funds for Fiscal Investment and Loan Program agencies’ projects.

     Under the plan, funds are lent to government-related entities such as public corporations, special accounts and local governments. The total funds allocated under the initial plan for JFY 2004 is ¥20,489 billion. The sources of funds for the plan in JFY 2004 are the Fiscal Loan Fund (¥14,126 billion), Postal Savings Fund (¥700 billion), Postal Life Insurance Fund (¥1,200 billion), the Industrial Investment Special Account (¥81 billion), Government-guaranteed domestic bonds (¥3,700 billion) and Government-guaranteed foreign bonds (¥683 billion).

     The following table shows the uses of funds allocated under the initial plan for the periods indicated.

                                         
    JFY   JFY   JFY   JFY   JFY
    2000(a)
   2001
   2002
   2003
   2004
    (in billions)
Housing
   ¥ 12,762     ¥ 9,734     ¥ 6,171     ¥ 3,276     ¥ 1,537  
Living Environment
     6,653       6,468       5,756       5,249       5,375  
Social Welfare
     1,564       1,253       1,019       1,018       1,042  
Education
     848       922       881       855       842  
Small and Medium-sized Businesses
     6,272       5,248       4,734       4,212       3,890  
Agriculture, Forestry and Fisheries
     881       788       695       807       888  
National Land Preservation and Reconstruction in the Event of Disaster
     700       752       712       802       593  
Road Construction
     3,478       3,633       3,666       3,978       3,661  
Transportation and Communications
     693       747       617       678       438  
Regional Development
     1,093       1,118       1,058       1,054       817  
Industry/Technology
     683       326       195       291       333  
Trade/Economic Cooperation
     1,839       1,559       1,287       1,191       1,075  
 
    
 		      
 		      
 		      
 		      
 		  
Total
   ¥ 37,466     ¥ 32,547     ¥ 26,792     ¥ 23,412     ¥ 20,489  
 
    
 		      
 		      
 		      
 		      
 		  

(a)   Data for JFY 2000 exclude funds initially allocated to asset management businesses, which were eliminated in JFY 2001 along with the change to the Fiscal Investment and Loan Program system discussed above.

-23-

 

DEBT RECORD

     There has been no default in the payment of interest or principal of any internal Japanese Government obligation since the establishment of the modern Japanese state in 1868 or of any external Japanese Government obligation within a period of 20 years prior hereto.

JAPAN PUBLIC DEBT

     The following table summarizes, as of the dates indicated, the outstanding direct internal and external funded and floating debt of Japan. The term “floating debt” is used herein to mean all debt with maturities of one year or less from the date of issue. All other debt is classified as “funded debt.” Detailed debt tables are presented below.

     Japan is currently experiencing a severe fiscal situation, with the sum of Japan’s funded debt and floating internal debt having reached ¥703,148 billion at the end of JFY 2003, or 137.8% of Japan’s gross national income. The amount of public bonds issued by the Japanese Government as a percentage of its general account total revenues was 44.5% under the revised budget for JFY 2003 and 44.6% under the initial budget for JFY 2004. According to “Reform and Perspectives — FY 2002 Revision”, discussed above in “The Economy — Economic Policies”, the Japanese Government’s goal is to reduce its dependency on public bonds as a means of generating revenues and to achieve a primary balance surplus in the early 2010s.

Summary of Japan’s Public Debt

                         
                     
    Funded
   Floating
At the end of JFY
   Internal
   External
   Internal
    (in billions)   (in thousands)   (in billions)
1999
   ¥ 380,246       —     ¥ 109,124  
2000
     414,596       —       120,991  
2001
     478,233       —       129,079  
2002
     526,058       —       142,702  
2003
     523,970       —       179,178  

     As of March 31, 2004, Japan had guaranteed payment of principal and interest of various internal yen obligations in the aggregate principal amount of ¥54,556 billion and of various external obligations aggregating the equivalent of ¥3,949 billion.

     The following table sets forth the aggregate annual payments of principal in respect of the direct internal funded debt of Japan outstanding as of March 31, 2004 for the periods indicated.

Principal Payments on Direct Funded Debt of Japan

         
JFY
   Internal
    (in billions)
2005
   ¥ 176,411  
2006
     88,783  
2007
     61,765  
2008
     65,512  
2009 to 2034
     277,422  
 
    
 		  
Total
   ¥ 669,893  
 
    
 		  

-24-

 

INTERNAL DEBT

Direct Debt of the Japanese Government

     Funded Debt [MOF to check numbers in this table]

                 
            Principal Amounts
            Outstanding as of
Title and Interest Rate
   Year of Issue
   Year of Maturity
   March 31, 2004
            (in millions)
1. Bonds
                
Interest-Bearing Treasury Bond — 30 years, 13 Series (1.1-2.9%)
   1999-2004   2029-2033   ¥ 4,296,800  
Interest-Bearing Treasury Bond — 20 years, 66 Series (0.8-7.3%)
   1983-2004   2004-2023     43,783,834  
Interest-Bearing Treasury Bond — 15 years, 20 Series (variable rate)
   2000-2004   2015-2019     17,882,800  
Interest-Bearing Treasury Bond — 10 years, 89 Series (0.5-4.7%)
   1994-2004   2004-2014     264,748,624  
Interest-Bearing Treasury Bond for Individual Investors — 10 years, 5 Series (variable rate)
   2003-2004   2013-2014     3,349,881  
Inflation-Indexed Bonds — 10 years, 1 Series (1.2%)
   2004   2014     99,301  
Interest-Bearing Treasury Bond — 6 years, 13 Series (0.7-1.6%)
   1998-2001   2004-2007     12,216,044  
Interest-Bearing Treasury Bond — 5 years, 35 Series (0.2-1.3%)
   2000-2004   2005-2009     102,763,534  
Interest-Bearing Treasury Bond — 4 years, 5 Series (0.6-1.1%)
   2000-2001   2004-2005     2,613,047  
Interest-Bearing Treasury Bond — 2 years, 24 Series (0.1-0.2%)
   2002-2004   2004-2006     54,807,610  
Discount Treasury Bond — 5 years, 8 Series
   1999-2000   2004-2005     454,515  
Discount Treasury Bond — 3 years, 10 Series
   2001-2002   2004-2005     1,165,248  
6% Bereaved Family Treasury Bond, 9 Series
   1995-2003   2004-2012     15  
6% Repatriation Treasury Bond, 8 Series
   1994-2001   2004-2011     0  
Non-interest Repatriation Special Benefit Treasury Bond, 8 Series
   1994-2001   2004-2011     1  
Non-interest Special Benefit Treasury Bond IV, 2 Series
   1996-2003   2006-2013     10  
Non-interest Special Benefit Treasury Bond X, 6 Series
   1994-2003   2004-2013     462  
Non-interest Special Benefit Treasury Bond XIII, 1 Series
   2001   2006     204  
Non-interest Special Benefit Treasury Bond XIV, 1 Series
   2000   2005     1  
Non-interest Special Benefit Treasury Bond XVI, 1 Series
   1999   2004     0  
Non-interest Special Benefit Treasury Bond XVII, 8 Series
   1994-2003   2004-2013     4,545  
Non-interest Special Benefit Treasury Bond XVIII, 1 Series
   1996   2006     10,586  
Non-interest Special Benefit Treasury Bond XIX, 2 Series
   1999-2000   2004-2005     6  
Non-interest Special Benefit Treasury Bond XX, 1 Series
   2001   2006     18  
Non-interest Special Benefit Treasury Bond XXI, 1 Series
   2003   2007     122  
Non-interest Special Benefit Treasury Bond XXII, 1 Series
   2003   2013     141,592  
Non-interest Treasury Bond for Special Condolence VI, 1 Series
   1995   2005     109,474  
Non-interest Treasury Bond for Special Condolence VII, 1 Series
   1999   2005     4,689  
 
            
 		  
Total Bonds
           ¥ 508,452,963  
 
            
 		  
2. Borrowings
                
Extraordinary Military Expenditure(a)
   1943-1945         41,422  
Local Allocation and Local Transfer Tax(b)
   1992-1995   2004-2005     348,660  
JNR Settlement Corporation
   1991-1995   2004-2011     149,620  
Ex-Japan National Railways
   1987-1995   2004-2011     2,854,857  
Honshu-Shikoku Bridge Authority
   2003   2009-2011     220,400  
National Property Special Consolidation Fund (1.1-3.15%)
   1996-2001   2004-2014     347,735  
National Schools (0.5-8.0%)
   1980-2004   2004-2028     1,004,737  
National Hospitals (0.5-8.5%)
   1979-2004   2004-2029     997,200  
National Forest Service (0.273-3.4%)
   1996-2004   2004-2033     1,279,559  
Government Operated Land Improvement Project (0.7-8.0%)
   1978-2004   2008-2029     909,201  
Airport Improvement (0.7-6.6%)
   1987-2004   2007-2024     945,342  
Postal Service
             0  
Finance for Urban Redevelopment (0.8-4.75%)
   1994-2004   2004-2013     165,020  
Postal Savings
             0  
Structure on Oil and Energy (0.48-5.5%)
   2000-2004   2004-2016     1,100,582  
 
            
 		  
Total Borrowings
           ¥ 10,364,334  
 
            
 		  
Total Direct Internal Funded Debt
           ¥ 518,817,297  
 
            
 		  

(a)   Represents borrowings by the Government from special corporations of currencies of areas under Japanese control during World War II. The maturity of such borrowings and other matters relating to such borrowings remain undetermined.
 
(b)   Represents borrowing which was transferred from a Special Account to the General Account by recent legislation.

-25-

 

Floating Debt

                     
                Principal Amounts
                Outstanding as of
Title
   Interest
   Year of Maturity
   March 31, 2004
                (in millions)
1. Bonds
                    
Financing Bills
               ¥ 86,125,870  
Treasury Financing Bills
   Non-interest bearing     2004       0  
Food Financing Bills
   Non-interest bearing     2004       675,000  
Foreign Exchange Financing Bills
   Non-interest bearing     2004       85,039,670  
Fiscal Loan Fund Financing Bills
   Non-interest bearing     2004       0  
Oil Financing Bills
   Non-interest bearing     2004       411,200  
Treasury Bills, 18 Series
   Non-interest bearing     2003-2004       34,198,380  
Note in Substitution for Currency of the International Monetary Fund
   Non-interest bearing   Payable on demand       1,740,247  
Note in Substitution for Currency of the Global Environment Facility Trust Fund of the International Bank for Reconstruction and Development
   Non-interest bearing   Payable on demand       51,225  
Note in Substitution for Currency of the International Development Association
   Non-interest bearing   Payable on demand       191,556  
Note in Substitution for Currency of the Asian Development Bank
   Non-interest bearing   Payable on demand       1,767  
Note for Contribution to the Special Funds of the Asian Development Bank
   Non-interest bearing   Payable on demand       85,142  
Note in Substitution for Currency of the African Development Fund
   Non-interest bearing   Payable on demand       64,098  
Note in Substitution for Currency of the Inter-American Development Bank
   Non-interest bearing   Payable on demand       0  
Note in Substitution for Currency of the Multilateral Investment Fund of the Inter-American Development Bank
   Non-interest bearing   Payable on demand       24,984  
Note in Substitution for Currency of the International Fund for Agricultural Development
   Non-interest bearing   Payable on demand       0  
Note in Substitution for Currency of the African Development Bank
   Non-interest bearing   Payable on demand       553  
Note in Substitution for Currency of the Multilateral Investment Guarantee Agency
   Non-interest bearing   Payable on demand       721  
Note in Substitution for Currency of the Common Fund for Commodities (First Account)
   Non-interest bearing   Payable on demand       1,523  
Note in Substitution for Currency of the Common Fund for Commodities (Second Account)
   Non-interest bearing   Payable on demand       1,636  
Note in Substitution for Currency of the European Bank for Reconstruction and Development
   Non-interest bearing   Payable on demand       5,706  
 
                
 		  
Total Bonds
               ¥ 208,619,278  
 
                
 		  
2. Borrowings
                    
Local Allocation and Local Transfer Tax
   0.021%–0.6%     2004     ¥ 48,527,711  
Welfare Insurance
   0.6%     2004       1,479,228  
Special Accounts for Petroleum and Sophisticated
Structure of Energy of Supply and Demand
    
0.036%–0.037%		      
2004–2005		        
234,400		  
 
                
 		  
Total Borrowings
               ¥ 50,241,339  
Total Direct Internal Floating Debt
               ¥ 258,860,617  
 
                
 		  
Total Direct Internal Debt
               ¥ 777,578,611  
 
                
 		  

-26-

 

Debt Guaranteed by the Japanese Government

                         
                    Principal Amounts
                    Outstanding as of
Title
   Interest
   Year of Issue
   Year of Maturity
   March 31, 2004
                    (in millions)
1. Bonds Issued by Government-Affiliated Corporations
                        
National Life Finance Corporation
   0.40-1.40%   2000-2004     2005-2014     ¥ 540,000  
The Government Housing Loan Corporation
   1.30-1.90%   2000-2001     2010-2011       711,600  
Agriculture, Forestry and Fisheries Finance Corporation
   0.50-1.50%   2001-2003     2006-2013       41,000  
Japan Finance Corporation for Small Business
   0.20-4.40%   1994-2004     2004-2014       2,765,000  
Japan Finance Corporation for Municipal Enterprises
   0.50-4.70%   1994-2004     2004-2014       16,338,420  
Development Bank of Japan
   0.80-3.10%   1996-2004     2006-2014       350,000  
Japan Highway Public Corporation
   0.50-4.60%   1994-2004     2004-2014       7,243,960  
Metropolitan Expressway Public Corporation
   0.90-4.70%   1994-2004     2004-2014       678,360  
Incorporated Administrative Agency-Japan Water Agency
   2.60-3.40%   1995-1997     2005-2007       50,000  
Hanshin Expressway Public Corporation
   0.50-4.60%   1994-2004     2004-2014       451,840  
Japan Railway Construction, Transport and Technology Agency.
   1.20-4.70%   1994-1999     2003-2009       769,464  
New Tokyo International Airport Authority
   0.60-1.40%   2002-2003     2012-2013       54,652  
Japan Oil, Gas and Metals National Corporation
   2.00-4.70%   1994-1998     2004-2008       9,737  
Honshu-Shikoku Bridge Authority
   1.40-4.70%   1994-2004     2004-2014       256,920  
Housing and Urban Development Corporation
   1.90-4.70%   1994-1999     2004-2009       340,050  
Welfare and Medical Service Agency
   2.60-3.30%   1995-1997     2005-2007       40,020  
Japan Bank for International Cooperation
   2.90-3.00%   1995-1996     2005-2006       25,000  
Deposit Insurance Corporation of Japan
   0.10-1.20%   2000-2004     2004-2011       9,000,000  
Electric Power Development Co., Ltd.
   1.10-4.70%   1994-2001     2004-2011       586,240  
Kansai International Airport Co., Ltd.
   0.20-5.10%   1994-2004     2004-2013       508,600  
Trans-Tokyo Bay Highway Corporation
   2.10-4.50%   1994-1997     2004-2007       285,150  
Organization for Promoting Urban Development
   0.80-4.60%   1994-2004     2004-2014       7,595  
Central Japan International Airport Co., Ltd.
   0.80-2.10%   1999-2004     2009-2014       222,320  
 
                    
 		  
Total
                   ¥ 41,275,928  
 
                    
 		  
2. Borrowings of Government-Affiliated Corporations
                        
Japan Oil, Gas and Metals National Corporation
   0.561-0.858%   2002-2004     2004-2007     ¥ 306,397  
Power Reactor and Nuclear Fuel Development Corp.
   0.743-2.200%   2002-2004     2005-2007       19,554  
Japan Environment Corporation
   0.508-0.830%   2003-2004     2005-2008       8,800  
Incorporated Administrative Agency — Agriculture, Forestry and Fisheries Credit Foundations
   0.859%   2003     2007       1,996  
Incorporate Administrative Agency — Farmers Pension Fund
   0.603-1.300%   2002-2004     2007-2009       289,405  
Japan Railway Construction, Transport and Technology Agency.
   0.4640-0.4948%   2003-2004     2004-2005       37,000  
Deposit Insurance Corporation of Japan
   0.022-0.058%   2003-2004     2004-2005       10,879,100  
Organization for Environment Improvement around Airport
   0.750-2.300%   2000-2004     2004-2008       1,009  
Life Insurance Policyholders Protection Corporation of Japan
   0.420-0.440%   2001     2005       136,000  
Industrial Revitalization Corporation Japan
   0.001-0.014%   2003-2004     2004       87,000  
Organization for Promoting Urban Development
   0.803-2.000%   2001-2004     2004-2007       696,063  
Banks’ Shareholdings Purchase Corporation
   0.010-0.100%   2003-2004     2004-2005       817,706  
 
                    
 		  
Total
                   ¥ 13,280,030  
 
                    
 		  
Total Internal Debt Guaranteed by the Japanese Government
                   ¥ 54,555,958  
 
                    
 		  

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EXTERNAL DEBT

Debt Guaranteed by the Japanese Government

                             
                Principal Amounts   Principal Amounts
                Outstanding as of   Outstanding as of
    Interest
   Year of Loan
   Year of Maturity
   March 31, 2004
   March 31, 2004
                (in thousands)   (in thousands)
Development Bank of Japan
   6.875%   1999   2011   $ 750,000     € —  
 
   9.125%   1995   2005   £ 250,000       —  
 
   3.000%   1998   2005   SFr 190,000       —  
 
   7.500%   1996   2005   DM 150,000       76,694  
 
   5.625%   2001   2011   € 750,000       750,000  
 
   1.400-2.875%   1996-2003   2006-2028   ¥ 430,000,000       —  
Japan Bank for International Cooperation
   6.250-8.250%   1993-2001   2004-2009   $ 4,600,000       —  
 
   3.250-4.500%   2003   2008-2013   € 1,000,000       1,000,000  
 
   0.350-2.875%   1995-2003   2005-2008   ¥ 120,000,000       —  
 
   5.750-7.750%   1993-1997   2003-2007   DM 1,750,000       894,761  
 
   8.000%   1997   2007   £ 400,000       —  
 
   5.750-6.625%   1996-1997   2007-2008   FFr 3,500,000       533,572  
Japan Finance Corporation for Municipal Enterprises
   5.875-7.500%   1993-2001   2004-2011   $ 3,250,000       —  
 
   3.000-5.500%   1994-1998   2004-2008   SFr 610,000       —  
 
   5.000-7.750%   1994-1998   2003-2008   DM 850,000       434,598  
 
   5.750-9.125%   1995-1999   2005-2019   £ 430,000       —  
 
   5.750%   1997   2007   DFL 300,000       136,134  
 
   5.875%   1997   2007   FFr 1,000,000       152,449  
 
   6.750%   1997   2007   NZ$ 100,000       —  
 
   1.350-1.550%   2002-2003   2012-2013   ¥ 330,000,000       —  
Japan Finance Corporation for Small Business
   floating rate   2002   2009   € 300,000       600,000  
 
   4.125%   2003   2010   € 300,000          
Japan Highway Public Corporation
   3.375-7.625%   1994-2003   2004-2008   $ 4,400,000       —  
The Metropolis of Tokyo
   6.125-7.875%   1994-2001   2004-2011   $ 1,530,000       —  
 
   5.750%   1997   2007   FFr 1,700,000       259,163  
 
   4.500%   1999   2009   € 150,000       150,000  
Yokohama City
   3.250-3.750%   1997-1999   2007-2009   SFr 235,000       —  
 
   6.500-7.625%   1994-1999   2004-2009   $ 780,000       —  
Kobe City
   6.500%   1995   2005   $ 230,000       —  
 
   9.500%   1994   2004   £ 200,000       —  
Electric Power Development Co., Ltd.
   5.625%   1997   2007   FFr 1,800,000       274,408  
 
   1.800%   2000   2010   ¥ 38,000,000       —  
 
   4.875%   1999   2006   € 250,000       250,000  
Kansai International Airport Co., Ltd.
   7.250%   1996   2006   $ 200,000       —  
 
   7.375%   1997   2007   £ 115,000       —  
 
   3.250%   1998   2005   SFr 200,000       —  
 
   1.300%   1999   2004   ¥ 20,000,000       —  
Trans-Tokyo Bay Highway Corporation
   6.875-8.375%   1994-1996   2004-2006   $ 400,000       —  
 
   3.750-4.000%   1996-1997   2006-2007   SFr 390,000       —  
 
                
 		      
 		  
 
   Totals by currency           $ 16,140,000     € —  
 
               SFr 1,645,000       —  
 
               DM 2,750,000       1,406,053  
 
               FFr 8,000,000       1,219,592  
 
               £ 1,395,000       —  
 
               € 2,750,000       2,750,000  
 
               ¥ 938,000,000       —  
 
               DFL 300,000       136,134  
 
               NZ$ 100,000       —  
 
                
 		      
 		  
 
                       € 5,511,779  
 
                        
 		  

-28-

 

SUBSCRIPTIONS TO INTERNATIONAL FINANCIAL ORGANIZATIONS

     The following table sets forth information relating to Japan’s obligations to contribute to the capital and financing requirements of international financing organizations in which it participates as of March 31, 2004.

         
Organization
   Subscription Amount
    (in millions)
International Monetary Fund
   $ 19,638 (a)
International Bank for Reconstruction and Development
     15,321 (b)
International Development Association
     26,231 (c)
International Finance Corporation
     141 (d)
International Fund for Agricultural Development
     0 (e)
Multilateral Investment Fund
     500 (e)
Multilateral Investment Guarantee Agency
     97 (f)
Asian Development Bank
     8,206 (g)
African Development Bank
     1,754 (h)
African Development Fund
     2,539 (h)
European Bank for Reconstruction and Development
     2,146 (i)
Inter-American Development Bank
     5,673 (j)
Inter-American Investment Corporation
     24 (k)

(a)   Equivalent of SDR13,312.8 million. Of Japan’s past subscriptions, 4% was initially paid in gold, 19% in SDRs and 77% in yen, including non-interest bearing demand notes payable in yen.
 
(b)   Of this amount, 6% has been paid and the balance is callable by the IBRD if required to meet its obligations in respect of funds borrowed or indebtedness guaranteed by the IBRD.
 
(c)   As stated in IDA Financial Statements as of June 30, 2003.
 
(d)   As stated in IFC Financial Statements as of June 30, 2003.
 
(e)   Contributed.
 
(f)   As stated in MIGA Financial Statements as of June 30, 2003.
 
(g)   Of this amount, 7% represents paid-in capital and the balance is callable by the ADB if required to meet its obligations in respect of funds borrowed or indebtedness guaranteed by the ADB.
 
(h)   As stated in AfDB / AfDF Financial Statements as of December 31, 2003.
 
(i)   Equivalent of ¥1,703.50 million. The amount in US dollar as of December 31, 2003, the end of the fiscal year of the EBRD.
 
(j)   Includes $5,050 million as a subscription to ordinary capital and $622 million as a contribution to the IADB’s Fund for Special Operations. As stated in IDB Financial Statements as of December 31, 2003.
 
(k)   As stated in IIC Financial Statements as of December 31, 2003.

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