EX-1 DESCRIPTION OF JAPAN DATED NOV 7, 2003

This description of Japan is dated November 7, 2003 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, 2003.

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.


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	11
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		20
	Revenues, Expenditures and Budgets	20
	Tax Structure	23
	Fiscal Investment and Loan Program (“Zaito”)	24
DEBT RECORD		25
JAPAN PUBLIC DEBT		26
INTERNAL DEBT		27
EXTERNAL DEBT		30
SUBSCRIPTIONS TO INTERNATIONAL FINANCING ORGANIZATIONS		31

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, 2003. 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 November 6, 2003, as reported by The Bank of Japan at 5:00 p.m., Tokyo time, was ¥109.90=$1.00, and the noon buying rate on November 6, 2003 for cable transfers in New York City payable in yen, as reported by the Federal Reserve Bank of New York, was ¥110.15=$1.00. See “Foreign Trade and Balance of Payments — Foreign Exchange Rates”.

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.

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 127.6 million (estimated as of April 2003). 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 1998-2002 was 0.2%. Japan’s population increased 0.11% during the 12 months ended December 31, 2002.

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 247 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 prefectures, 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.

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 June 2, 2000 and an election was held on June 25, 2000 under a revised electoral system in which 300 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 247 members who are elected for six-year terms with one-half of the membership being elected every three years. In an election in July 2001, which was the first one held under a revised system, 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 the other 46 prefectures of Japan. In the next election scheduled for 2004 and thereafter, the total number of the members of the House of Councillors will decrease to 242, of which 96 members will be elected through a proportional representation system, and 146 members will be elected from the 47 districts. Currently, the House of Councillors consists of 126 members who were elected in July 1998 and 121 members who were elected in July 2001.

The following tables sets forth the membership by political party of the House of Representatives as of August 19, 2003 and the House of Councillors as of August 22, 2003.

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”.

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 significantly increased 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 be returned to private sector ownership. The economic situation has been extremely severe since the late 1990s due to decreases in final 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.

In JFY 2002, there were some signs of recovery in the Japanese economy, such as increases in corporate profits, exports and production. The provisional growth rate of Japan’s GDP for JFY 2002 at 1.6% is above the projected growth rate of 0.0% that the Japanese Government published in December 2001. There are uncertainties, however, in the current outlook for Japan’s economy, particularly in light of the uncertain near-term prospects of the world economy, the outbreak of severe acute respiratory syndrome or SARS, in China and other Asian countries, persistent deflationary pressure and a large amount of non-performing loans.

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”.

•

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.

•

April 2003. The Japanese Government enacted the Industrial Revitalization Corporation Law to establish the Industrial Revitalization Corporation (“IRC”) in April 2003, and its operations were launched in May 2003. The IRC will acquire from private financial institutions some loans made to viable but struggling companies and work to rehabilitate those companies. The Japanese Government also revised the Law on Special Measures for Industrial Revitalization to further accelerate efforts to revitalize domestic industries and corporations.

The following table sets forth information pertaining to Japan’s gross domestic product for JFY 1997 through JFY 2002.

In December 2002, Japan released revised GDP data for JFY 1990 through to JFY 2001. The revisions were due to the implementation by Japan of a new valuation method for calculating national accounts. As a result of this new method for calculating GDP, the GDP information which follows revises and replaces previously published GDP information, National Income information and certain other financial information. For JFY 2002, such information is calculated pursuant to the new valuation method.


																					Percentage
																					of JFY
			JFY			JFY			JFY			JFY			JFY			JFY			2002
			1997			1998			1999			2000			2001(b)			2002(b)			GDP

			(yen amounts in billions)
Total Consumption
	Private sectors			¥ 286,348			¥ 287,933			¥ 287,365			¥ 286,121			¥ 285,725			¥ 286,013			57.3	%
	Public sectors			79,576			81,418			83,366			86,946			88,645			88,670			17.8

				365,924			369,351			370,730			373,067			374,370			374,683			75.1
Total Gross Capital Formation
	Private sectors
		Producers’ Durable Equipment		82,706			76,866			75,198			79,793			74,782			71,410			14.3
		Residential Construction		22,745			19,815			20,427			20,338			18,485			17,719			3.6
Public sectors				39,593			39,532			38,285			35,135			32,819			30,094			6.0

				145,043			136,233			133,910			135,267			126,086			119,223			23.9
Additions to Business Inventories
	Private sectors			2,749			(711	)		(1,847	)		777			(1,696	)		(927	)		(0.2	)
	Public sectors			267			(25	)		66			117			(39	)		(2	)		0.0

				3,015			(737	)		(1,781	)		894			(1,735	)		(929	)		(0.2	)
Net Exports of Goods and Services				7,171			9,570			7,829			6,196			3,869			6,197			1.2

Gross Domestic Product (=GDE) Current Prices				¥ 521,153			¥ 514,418			¥ 510,687			¥ 515,424			¥ 502,591			¥ 499,174			100.0	%

Gross Domestic Product (=GDE) Constant Prices(a)				¥ 522,221			¥ 518,706			¥ 523,982			¥ 539,161			¥ 532,449			¥ 541,214

Surplus of the Nation on Current Account
	Exports of Goods and Services and Other Receipts from Abroad			14,403			13,563			11,142			12,198			13,716			12,519
Less: Imports of Goods and Services and Other Payments Abroad				(7,640	)		(6,709	)		(4,802	)		(5,248	)		(5,174	)		(4,477	)

				6,764			6,854			6,340			6,950			8,542			7,931

Gross National Income				¥ 527,917			¥ 521,272			¥ 517,027			¥ 522,374			¥ 511,133			¥ 507,105
Percentage Changes of GDP from Previous Year
		At Current Prices		0.9	%		-1.3	%		0.7	%		0.9	%		-2.5	%		-0.7	%
		At Constant Prices(a)		0.2			-0.7			1.0			2.9			-1.2			1.6
		Deflator		0.7			-0.6			-1.7			-2.0			-1.3			-2.3

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

The following table sets forth the proportion of gross domestic product contributed by major industrial sectors of the economy for 1997 through 2001. These figures have been revised to reflect the new method for calculating GDP, as discussed above.


				1997			1998			1999			2000			2001

Industry
	Agriculture, Forestry and Fisheries				1.6	%		1.6	%		1.5	%		1.4	%		1.4	%
	Mining				0.2			0.1			0.1			0.1			0.1
	Manufacturing				22.8			22.0			21.8			21.8			20.5
	Construction				7.9			7.7			7.6			7.4			7.0
	Electric Power Generation, Gas and Water				2.7			2.8			2.8			2.8			2.9
	Wholesale and Retail Trade				15.4			15.0			14.4			13.6			13.9
	Finance and Insurance				5.8			5.7			5.9			6.1			6.6
	Real Estate				12.1			12.4			12.8			12.9			13.3
	Transportation and Communication				6.8			6.7			6.5			6.4			6.3
	Services				18.4			19.4			19.8			20.2			20.6

		Total			93.7			93.4			93.2			92.7			92.7
Public Services
	Electric Power Generation, Gas and Water				0.8			0.8			0.9			0.9			1.0
	Services				2.7			2.8			2.8			2.8			2.8
	Public Administration				5.0			5.2			5.3			5.4			5.5

		Total			8.4			8.8			9.0			9.1			9.3
Non-Profit Services					1.8			1.9			2.0			1.8			1.8

			Total		103.9	%		104.1	%		104.1	%		103.6	%		103.9	%

The following table sets forth the total amounts of primary energy supplied and the percentages supplied by different sources for JFY 1997 through JFY 2001.

The table below sets forth information regarding crude oil imports for JFY 1998 through JFY 2002.

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. Since peaking around March 2003, however, crude oil prices have decreased.

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 1997 through JFY 2001.

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

Japan’s labor force (seasonally adjusted) expanded steadily until 1998 but has been decreasing since 1999. In 2001, average employment (seasonally adjusted) was estimated at 64.1 million, including 4.9% employed in agriculture, forestry and fisheries, 30.0% in industry, and 65.1% in services and other sectors. In 2002, average employment (seasonally adjusted) was estimated at 63.3 million, including 4.2% employed in agriculture, forestry and fisheries, 29.1% in industry and 66.7% in services and other sectors. The unemployment rate (seasonally adjusted) in Japan has gradually increased since 1993 and it ranged between 5.3% and 5.5% during 2003. In the first two months of 2003, the rate remained between 5.2% and 5.5% and it was 5.4% in March 2003, the most recent period 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.

Japan is one of the leading trading nations of the world, ranking third to the United States and Germany in both merchandise exports and merchandise imports among the IMF member countries in 2001.

In 1998, Japan’s trade surplus increased to a record ¥13,991 billion as imports into Japan plunged, decreasing faster than exports. The trade surplus decreased to ¥12,280 billion in 1999 since exports decreased at a higher rate than imports. Both imports and exports increased substantially 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.

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.)


				1998				1999				2000				2001				2002

				(yen amounts in billions)
JAPAN’S EXPORTS
	Textile Products			¥	957	1.9	%	¥	900	1.9	%	¥	915	1.8	%	¥	916	1.9	%	¥	918	1.8	%
	Metals and Metal Products				3,209	6.3			2,711	5.7			2,852	5.5			2,889	5.9			3,227	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
		Motor Vehicles			7,795	15.4			7,095	14.9			6,930	13.4			7,211	14.7			8,775	16.8
		TV and Radio Receivers			485	1.0			431	0.9			480	0.9			484	1.0			569	1.1
		Motorcycles			587	1.2			526	1.1			562	1.1			574	1.2			561	1.1
		Scientific and Optical Instruments			2,141	4.2			2,241	4.7			2,626	5.1			2,504	5.1			1,897	3.6
		Other			24,960	49.3			23,562	49.6			26,717	51.7			23,749	48.5			24,616	47.2

			Total Machinery and Equipment		37,257	73.6			34,913	73.4			38,367	74.3			35,525	72.5			37,542	72.0
	Chemicals				3,556	7.0			3,503	7.4			3,805	7.4			3,739	7.6			4,174	8.0
	Foods and Beverages				261	0.5			239	0.5			227	0.4			364	0.7			269	0.5
	Other Exports				5,405	10.7			5,281	11.1			5,488	10.6			5,546	11.3			5,979	11.5

		Grand Total		¥	50,645	100.0	%	¥	47,548	100.0	%	¥	51,654	100.0	%	¥	48,979	100.0	%	¥	52,109	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	%
	Raw Materials				2,868	7.8			2,551	7.2			2,642	6.5			2,586	6.1			2,522	6.0
	Chemicals				2,726	7.4			2,637	7.5			2,855	7.0			3,101	7.3			3,239	7.7
	Mineral Fuels:
		Petroleum			2,930	8.0			3,040	8.6			4,819	11.8			4,718	11.1			4,573	10.8
		Coal			801	2.2			620	1.8			583	1.4			753	1.8			786	1.9
		Other			1,892	5.2			1,986	5.6			2,915	7.1			3,053	7.2			2,815	6.7

			Total Mineral
			Fuel		5,623	15.3			5,646	16.0			8,317	20.3			8,524	20.1			8,174	19.4
	Machinery and Equipment				11,172	30.5			11,045	31.3			12,924	31.6			13,216	31.2			13,434	31.8
	Other Imports				8,854	24.2			8,349	23.7			9,234	22.6			9,738	23.0			9,576	22.6

		Grand Total		¥	36,654	100.0	%	¥	35,268	100.0	%	¥	40,938	100.0	%	¥	42,416	100.0	%	¥	42,228	100.0	%


				1998				1999				2000				2001				2002

				(yen amounts in billions)
JAPAN’S EXPORTS
	Asia			¥	17,560	34.7	%	¥	17,694	37.2	%	¥	21,254	41.1	%	¥	19,732	40.3	%	¥	22,439	43.1	%
		China			2,621	5.2			2,657	5.6			3,274	6.3			3,764	7.7			4,980	9.6
		(Asia NIES)			10,224	20.2			10,244	21.5			12,356	23.9			10,626	21.7			11,805	22.7
		(ASEAN)			6,085	12.0			6,170	13.0			7,381	14.3			6,592	13.5			6,970	13.4
	Oceania				1,273	2.5			1,206	2.5			1,110	2.1			1,131	2.3			1,278	2.5
		Australia			1,049	2.1			962	2.0			924	1.8			933	1.9			1,039	2.0
	North America				16,299	32.2			15,394	32.4			16,162	31.3			15,509	31.7			15,791	30.3
		U.S.A.			15,470	30.5			14,605	30.7			15,356	29.7			14,711	30.0			14,873	28.5
		Canada			828	1.6			789	1.7			806	1.6			797	1.6			918	1.8
	Central and South America				2,731	5.4			2,216	4.7			2,265	4.4			2,168	4.4			2,036	3.9
	Western Europe				10,081	19.9			9,068	19.1			9,000	17.4			8,326	17.0			8,164	15.7
		EU			9,320	18.4			8,462	17.8			8,432	16.3			7,810	15.9			7,663	14.7
	Central and Eastern Europe, Russia etc.				313	0.6			230	0.5			271	0.5			297	0.6			364	0.7
		Russia			128	0.3			55	0.1			61	0.1			87	0.2			118	0.2
	Middle East				1,621	3.2			1,113	2.3			1,047	2.0			1,277	2.6			1,423	2.7
	Africa				766	1.5			626	1.3			544	1.1			538	1.1			614	1.2

			Total	¥	50,645	100.0	%	¥	47,548	100.0	%	¥	51,654	100.0	%	¥	48,979	100.0	%	¥	52,109	100.0	%

JAPAN’S IMPORTS
	Asia			¥	13,588	37.1		¥	13,970	39.6		¥	17,063	41.7		¥	17,987	42.4		¥	18,358	43.5
		China			4,844	13.2			4,875	13.8			5,941	14.5			7,027	16.6			7,728	18.3
		(Asia NIES)			3,756	10.2			4,102	11.6			5,008	12.2			4,642	10.9			4,440	10.5
		(ASEAN)			5,191	14.2			5,259	14.9			6,424	15.7			6,604	15.6			6,465	15.3
	Oceania				2,058	5.6			1,767	5.0			1,929	4.7			2,090	4.9			2,074	4.9
		Australia			1,700	4.6			1,457	4.1			1,596	3.9			1,756	4.1			1,753	4.2
	North America				9,791	26.7			8,551	24.2			8,728	21.3			8,622	20.3			8,140	19.3
		U.S.A.			8,778	23.9			7,640	21.7			7,779	19.0			7,671	18.1			7,237	17.1
		Canada			1,003	2.7			900	2.6			938	2.3			941	2.2			895	2.1
	Central and South America				1,207	3.3			1,101	3.1			1,183	2.9			1,178	2.8			1,198	2.8
	Western Europe				5,675	15.5			5,436	15.4			5,567	13.6			5,981	14.1			6,081	14.4
		EU			5,099	13.9			4,862	13.8			5,043	12.3			5,412	12.8			5,482	13.0
	Central and Eastern Europe, Russia etc.				491	1.3			527	1.5			624	1.5			623	1.5			570	1.4
		Russia			378	1.0			429	1.2			494	1.2			468	1.1			410	1.0
	Middle East				3,332	9.1			3,450	9.8			5,310	13.0			5,384	12.7			5,095	12.1
	Africa				513	1.4			465	1.3			535	1.3			551	1.3			710	1.7

			Total	¥	36,654	100.0	%	¥	35,268	100.0	%	¥	40,938	100.0	%	¥	42,416	100.0	%	¥	42,228	100.0	%

In 1998, Japan registered a surplus of ¥15,528 billion in the Current Account primarily as a result of a surplus of ¥15,984 billion in Trade Balance. In 1999, the Current Account surplus decreased to ¥13,052 billion, mainly due to the reduction both in Exports and in Income. 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 Service deficit. 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.


				1998			1999			2000			2001			2002

				(in billions)
Current Account				¥	15,528		¥	13,052		¥	12,876		¥	10,652		¥	14,140
	Balance on Goods and Services				9,530			7,865			7,430			3,212			6,469
		Trade Balance			15,984			14,016			12,563			8,527			11,733
			Exports (f.o.b.)		48,867			45,795			49,526			46,584			49,480
			Imports (f.o.b.)		32,882			31,779			36,962			38,056			37,746
		Services			(6,455	)		(6,151	)		(5,134	)		(5,315	)		(5,264	)
	Income				7,144			6,574			6,505			8,401			8,267
	Current Transfers				(1,146	)		(1,387	)		(1,060	)		(960	)		(596	)
Capital and Financial Account(a)					(17,082	)		(6,274	)		(9,423	)		(6,173	)		(8,478	)
	Balance on Financial Account				(15,151	)		(4,366	)		(8,428	)		(5,826	)		(8,056	)
		Assets			1,731			21,331			(1,452	)		343			322
		Liabilities			(16,882	)		(25,697	)		(6,977	)		(6,169	)		(8,378	)
	Capital Account				(1,931	)		(1,909	)		(995	)		(346	)		(422	)
Changes in Reserve Assets					999			(8,796	)		(5,261	)		(4,936	)		(5,797	)
Errors and Omissions					556			2,018			1,809			457			(135	)

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

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.

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, 2003, the Bank of Japan had total assets of ¥128,310 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. Since March 19, 2001, the Bank of Japan has conducted money market operations by adjusting the outstanding balance of the current accounts at the Bank. In recent years, the Bank of Japan maintained a policy of quantitative monetary easing. For example, most recently in May 2003, 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 ¥27 trillion and ¥30 trillion, from the previous range of between ¥22 trillion to ¥27 trillion.

The following table sets forth the principal economic indicators relating to monetary policy from 1998 through 2002.

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 Japan Finance Corporation for Small Business, 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 Small and Medium Enterprise Corporation whose purposes are to supplement private financing in their respective fields of activity.

According to the Financial Service Agency, the private banking system included six city banks, as of March 17, 2003, and 116 local banks, as of April 1, 2003, whose business corresponds roughly to that of commercial banks in the United States, as well as 27 trust banks. In addition, two long-term credit banks mainly supply long-term funds to industry for expenditures on plant and equipment.

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.

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 considered the JFY 2003 budget, like the JFY 2002 budget, as a “budget committed to reform”. In formulating the JFY 2003 budget, the Japanese Government placed importance on four categories of goals: progress and utilization of human resources—education and culture, science and technology and information technology; building attractive urban areas and local areas with their own ideas and characteristics; taking necessary measures to build a fair and secure society addressing the aging society and declining birth-rate; and creation of an environment-friendly society and economy to deal with global environmental problems. The initial JFY 2003 budget sets the general account total expenditures at a level lower than that of the JFY 2002 budget.

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.

The following tables set forth information with respect to the General Account, the Special Accounts and the Government Affiliated Agencies for JFY 1998 through JFY 2001, and the budgets for JFY 2002 and JFY 2003.


											JFY		JFY
			JFY		JFY		JFY		JFY		2002		2003 Budget
			1998		1999		2000		2001		(Estimate)		(Initial)

			(in billions)
REVENUES
	Total Revenues, General Account		¥	89,783	¥	94,376	¥	93,361	¥	86,903	¥	87,845	¥	81,789
	Total Revenues, Special Accounts			306,417		310,176		341,146		396,224		411,014		383,418
		Less: Inter-Account Transactions(b)		170,856		170,763		199,838		207,400		226,298		220,242

	Total Consolidated Revenues		¥	225,344	¥	233,789	¥	234,670	¥	275,727	¥	272,561	¥	244,965

EXPENDITURES
	Total Expenditures, General Account		¥	84,392	¥	89,037	¥	89,321	¥	84,811	¥	87,833	¥	81,789
	Total Expenditures, Special Accounts			272,579		279,369		305,776		363,337		388,146		369,298
		Less: Inter-Account Transactions(b)		170,421		169,643		195,631		199,805		221,568		218,742

	Total Consolidated Expenditures		¥	186,550	¥	198,763	¥	199,466	¥	248,343	¥	254,410	¥	232,345

Surplus of Consolidated Revenues over Consolidated Expenditures			¥	38,794	¥	35,026	¥	35,204	¥	27,384	¥	18,151	¥	12,620


												JFY			JFY
												2002			2003
			JFY		JFY			JFY		JFY		Budget			Budget
			1998		1999			2000		2001		(Revised)			(Initial)

			(in billions)
REVENUES
	Tax and Stamp Revenues		¥	49,432	¥	47,234		¥	50,712	¥	47,948	¥	44,276		¥	41,786
	Carried-over Surplus			1,700		5,391			5,339		4,040		1			0
	Government Bond Issues			34,000		37,514			33,004		30,000		34,968			36,445
	Miscellaneous Receipts			4,651		4,237			4,306		4,915		4,444			3,558

		Total Revenues	¥	89,783	¥	94,376		¥	93,361	¥	86,903	¥	83,689		¥	81,789

EXPENDITURES
	Local Allocation Tax Grants, etc.		¥	14,305	¥	13,084		¥	15,829	¥	16,706	¥	16,479		¥	17,399
	National Debt Service			17,699		20,272			21,446		15,829		16,061			16,798
	Social Security			15,658		19,022			17,636		19,291		19,740			18,991
	Public Works			13,034		12,972			11,910		10,820		9,968			8,097
	Education and Science			7,125		6,799			6,872		6,677		6,886			6,471
	National Defense			4,956		4,897			4,907		4,969		4,921			4,953
	Government Employee Pensions and Others			1,548		1,485			1,418		1,350		1,272			1,203
	Economic Assistance			1,082		1,019			1,012		961		850			816
	Major Foodstuff Measures			267		266			247		738		763			688
	Energy Measures			719		676			677		632		570			557
	Small and Medium-sized Businesses			979		818			933		425		637			173
	Transfer to the Industrial Investment Special Account			159		113			159		664		146			164
	Miscellaneous			6,862		5,996			6,276		5,749		5,195			5,131
	Contingencies			0		0			0		0		200			350
	Other Expenditures			0		1,618	(a)		0		0		1	(b)		0

		Total Expenditures	¥	84,392	¥	89,037		¥	89,321	¥	84,811	¥	83,689		¥	81,789

Surplus of Revenues over Expenditures			¥	5,391	¥	5,339		¥	4,040	¥	2,092	¥	—		¥	—


																	JFY				JFY
																	2002				2003
	JFY				JFY				JFY				JFY				Budget				Budget
	1998				1999				2000				2001				(Revised)				(Initial)

	Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.

	(in billions)
Trust Fund Bureau	¥	18,345	¥	16,702	¥	16,824	¥	14,546	¥	16,406	¥	12,879	¥	—	¥	—	¥	—	¥	—	¥	—	¥	—
Fiscal Loan Program Funds		—		—		—		—		—		—		58,453		55,544		47,515		45,178		54,536		51,297
Government Bonds Consolidation Fund		92,913		86,499		99,077		91,152		126,742		113,230		138,538		124,337		151,505		142,505		167,142		158,142
Foreign Exchange Fund		2,212		82		2,642		36		2,349		116		2,189		15		1,726		856		1,622		788
Local Allocation and Local Transfer Tax		36,557		36,188		44,206		43,869		54,995		53,999		61,005		60,273		64,487		64,327		67,308		67,126
Measures for Petroleum and the Advancement of Energy Demand and Supply Structure		1,043		577		1,010		528		1,097		550		1,144		621		668		628		1,589		1,571
National Schools		3,283		2,833		3,230		2,907		3,157		2,872		2,974		2,854		2,871		2,871		2,805		2,805
Welfare Insurances		41,442		36,326		41,498		37,439		40,198		38,241		39,772		39,391		42,955		41,982		42,610		42,244
Seamen’s Insurances		94		95		88		94		84		87		83		86		85		85		78		78
National Hospitals		1,159		1,072		1,147		1,070		1,148		1,087		1,078		1,059		1,024		1,024		980		980
National Pensions		22,433		20,886		22,849		21,376		23,093		21,709		23,354		22,063		21,752		21,681		22,169		22,139
Foodstuff Control		4,217		4,211		4,204		4,196		4,148		4,135		4,092		4,083		4,738		4,738		4,137		4,137
Agricultural Mutual Aid Reinsurance		156		124		126		94		119		60		114		47		132		120		127		116
National Forest Service		707		706		521		501		513		505		505		500		539		539		490		490
National Land Improvement		626		605		649		625		658		636		620		603		572		572		528		528
Trade Reinsurance		283		278		167		157		139		40		192		37		166		143		198		147
Compensation Reinsurance for Motor Vehicle Damages		2,790		554		2,727		560		2,861		584		2,967		573		914		849		837		773
Harbor Improvement		636		596		614		582		605		555		552		510		473		473		394		394
Airport Improvement		585		515		554		491		525		475		559		528		513		513		456		456
Postal Service(b)		7,125		7,113		7,178		7,184		7,170		7,172		6,976		6,985		7,112		7,112		—		—
Postal Savings(b)		31,389		26,470		24,547		21,723		17,178		16,509		12,136		10,930		12,633		10,932		—		—
Postal Life Insurance(b)		18,916		12,927		17,163		13,307		19,247		14,021		19,030		15,087		19,444		19,444		—		—
Labor Insurance		8,530		7,867		8,348		7,762		8,319		7,662		8,848		8,294		8,937		8,597		8,330		8,125
Road Construction and Improvement		5,894		5,332		5,951		5,376		5,778		5,146		5,933		5,041		4,797		4,797		4,131		4,131
Others		5,081		4,022		4,856		3,794		4,617		3,504		5,110		3,876		3,720		3,598		2,951		2,831

Total Revenues and Expenditures(a)	¥	306,417	¥	272,579	¥	310,176	¥	279,369	¥	341,146	¥	305,776	¥	396,224	¥	363,337	¥	399,277	¥	383,564	¥	383,418	¥	369,298

The central government derives tax revenues through taxes on income, consumption and property. The taxes on income, consumption and property account for 52.3%, 42.1% and 5.7%, respectively, of the total central government tax revenues in the JFY 2003 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 JFY 1989, a general value added consumption tax was introduced. Currently, the consumption tax rate is 5%, including 1% for local consumption tax.

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 deposits 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. These are the main sources of funds for The National Life Finance Corporation, Government Housing Loan Corporation, Japan Highway Public Corporation, etc. These agencies in turn lend the Fiscal Investment and Loan Program funds to private businesses or directly utilize such funds for their projects such as construction of housing and highways with the priorities of public policy.

The total funds allocated under the initial plan for JFY 2003 is ¥23,412 billion. The sources of funds for the plan in JFY 2003 are the Fiscal Loan Fund (¥16,841 billion), Postal Savings Fund (¥1,000 billion), Postal Life Insurance Fund (¥1,620 billion), the Industrial Investment Special Account (¥45 billion), Government-guaranteed domestic bonds (¥3,186 billion) and Government-guaranteed foreign bonds (¥719 billion).

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


		JFY		JFY		JFY		JFY		JFY
		1999		2000		2001		2002		2003

		(in billions)
Housing		¥	12,886	¥	12,762	¥	9,734	¥	6,171	¥	3,276
Living Environment			6,743		6,653		6,468		5,756		5,249
Social Welfare			1,489		1,564		1,253		1,019		1,018
Education			840		848		922		881		855
Small- and Medium-sized Enterprises			6,324		6,272		5,248		4,734		4,212
Agriculture, Forestry and Fisheries			850		881		788		695		807
National Land Preservation and Reconstruction in the Event of Disaster			666		700		752		712		802
Road Construction			3,398		3,478		3,633		3,666		3,978
Transportation and Telecommunications			735		693		747		617		678
Regional Development			1,362		1,093		1,118		1,058		1,054
Industry and Technology			1,401		683		326		195		291
Trade and Economic Cooperation			2,657		1,839		1,559		1,287		1,191

	Total	¥	39,349	¥	37,466	¥	32,547	¥	26,792	¥	23,412

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.

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 outstanding amount of government bonds expected to reach nearly ¥450 trillion at the end of JFY 2003. The amount of public bonds issued by the Japanese Government as a percentage of its total revenues is also expected to be 44.6% under the draft budget for JFY 2003, an increase from 41.8% under the budget for JFY 2002. 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.

As of March 31, 2003, Japan had guaranteed payment of principal and interest of various internal yen obligations in the aggregate principal amount of ¥54,320 billion and of various external obligations aggregating the equivalent of ¥4,097 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, 2003 for the periods indicated.


							Principal Amounts
							Outstanding as of
							March 31, 2003
Title and Interest Rate			Year of Issue		Year of Maturity		(in millions)

1. Bonds
	Interest-Bearing Treasury Bond — 30 years, 9 Series (1.4-2.9%)			1999-2003		2029-2032	¥	2,697,500
	Interest-Bearing Treasury Bond — 20 years, 60 Series (1.4-7.8%)			1983-2003		2003-2022		38,609,334
	Interest-Bearing Treasury Bond — 15 years, 14 Series (variable rate)			2000-2003		2015-2018		11,888,600
	Interest-Bearing Treasury Bond — 10 years, 91 Series (0.8-4.9%)			1993-2003		2003-2013		255,645,093
	Interest-Bearing Treasury Bond for Individuals — 10 years, 1 Series (variable rate)			2003		2013		383,512
	Interest-Bearing Treasury Bond — 6 years, 18 Series (0.7-1.9%)			1997-2001		2003-2007		14,768,310
	Interest-Bearing Treasury Bond — 5 years, 25 Series (0.3-1.3%)			2000-2003		2005-2008		73,599,117
	Interest-Bearing Treasury Bond — 4 years, 11 Series (0.4-1.1%)			1999-2001		2003-2005		8,165,451
	Interest-Bearing Treasury Bond — 2 years, 24 Series (0.1%)			2001-2003		2003-2005		54,295,218
	Discount Treasury Bond — 5 years, 13 Series			1998-2000		2003-2005		697,670
	Discount Treasury Bond — 3 years, 13 Series			2000-2002		2003-2005		1,545,985
	6% Bereaved Family Treasury Bond, 9 Series			1994-2002		2003-2011		17
	6% Repatriation Treasury Bond, 9 Series			1993-2001		2003-2011		0
	Non-interest Special Benefit Treasury Bond, 1 Series			1993		2003		0
	Non-interest Repatriation Special Benefit Treasury Bond, 8 Series			1993-2000		2003-2010		1
	Non-interest Special Benefit Treasury Bond IV, 2 Series			1993-1996		2003-2006		18
	Non-interest Special Benefit Treasury Bond X, 6 Series			1993-2000		2003-2010		669
	Non-interest Special Benefit Treasury Bond XIII, 1 Series			2001		2006		233
	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			1993-2002		2003-2012		52,089
	Non-interest Special Benefit Treasury Bond XVIII, 1 Series			1996		2006		14,115
	Non-interest Special Benefit Treasury Bond XIX, 2 Series			1999-2000		2004-2005		12
	Non-interest Special Benefit Treasury Bond XX, 1 Series			2001		2006		20
	Non-interest Treasury Bond for Special Condolence VI, 1 Series			1995		2005		164,212
	Non-interest Treasury Bond for Special Condolence VII, 1 Series			1999		2005		7,014

		Total Bonds					¥	462,534,191

2. Borrowings
	Extraordinary Military Expenditure(a)			1943-1945				41,422
	Local Allocation and Local Transfer Tax(b)			1992-1995		2003-2005		679,600
	JNR Settlement Corporation			1991-1995		2003-2011		243,637
	Ex-Japan National Railways			1987-1995		2003-2011		3,185,840
	National Property Special Consolidation Fund (1.1-3.15%)			1994-2002		2003-2014		419,918
	National Schools (0.5-8.0%)			1979-2003		2003-2027		1,020,111
	National Hospitals (0.5-8.5%)			1977-2003		2003-2028		998,821
	National Forest Service (0.8-3.4%)			1996-2003		2003-2033		1,261,671
	Government Operated Land Improvement Project (0.7-6.5%)			1977-2003		2007-2028		974,029
	Airport Improvement (0.7-6.6%)			1987-2003		2003-2023		971,716
	Postal Service (2.0-8.0%)			1978-2000		2003-2025		216,916
	Finance for Urban Redevelopment (0.8-4.75%)			1993-2002		2002-2010		213,634
	Postal Savings (1.1-4.9%)			1992-2000		2003-2010		47,950,000
	Structure on Coal, Oil and Energy (0.46-1.05%)			2000-2002		2005-2006		137,429
	Road Improvement Special Account							0

		Total Borrowings					¥	58,314,744

		Total Direct Internal Funded Debt					¥	520,848,935

Principal Amounts

Outstanding as of

March 31, 2003

Title

Interest

Year of Maturity

(in millions)

1. Bonds

Financing Bills

57,486,370

Treasury Financing Bills

Non-interest bearing

2003

Food Financing Bills

Non-interest bearing

2003

961,000

Foreign Exchange Financing Bills

Non-interest bearing

2003

56,525,370

Fiscal Loan Fund Financing Bills

Non-interest bearing

2003

Treasury Bills, 18 Series

Non-interest bearing

2003-2004

30,997,260

Note in Substitution for Currency of the International Monetary Fund

Non-interest bearing

Payable on demand

1,716,905

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

47,734

Note in Substitution for Currency of the International Development Association

Non-interest bearing

Payable on demand

155,467

Note in Substitution for Currency of the Asian Development Bank

Non-interest bearing

Payable on demand

2,650

Note for Contribution to the Special Funds of the Asian Development Bank

Non-interest bearing

Payable on demand

99,823

Note in Substitution for Currency of the African Development Fund

Non-interest bearing

Payable on demand

72,747

Note in Substitution for Currency of the Inter-American Development Bank

Non-interest bearing

Payable on demand

618

Note in Substitution for Currency of the Fund for Special Operations of the Inter-American Development Bank

Non-interest bearing

Payable on demand

Note in Substitution for Currency of the Multilateral Investment Fund of the Inter-American Development Bank

Non-interest bearing

Payable on demand

34,871

Note in Substitution for Currency of the International Fund for Agricultural Development

Non-interest bearing

Payable on demand

Note in Substitution for Currency of the African Development Bank

Non-interest bearing

Payable on demand

555

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

3,120

Note in Substitution for Currency of the European Bank for Reconstruction and Development

Non-interest bearing

Payable on demand

5,706

Note in Substitution for Currency of the Special Fund of Deposit Insurance Corporation of Japan

Non-interest bearing

Payable on demand

Total Bonds

148,112,440

2. Borrowings

Local Allocation and Local Transfer Tax

0.04%-0.3%

2003

46,656,058

Welfare Insurance

0.3%

2003

1,479,228

Postal Service

0.3%

2003

570,500

Total Borrowings

48,705,786

Total Direct Internal Floating Debt

196,818,226

Total Direct Internal Debt

714,418,688


									Principal Amounts
									Outstanding as of
									March 31, 2002
Title		Interest			Year of Issue		Year of Maturity		(in millions)

1. Bonds Issued by Government-Affiliated Corporations
National Life Finance Corporation			0.40-1.30	%		2000-2013		2005-2013	¥	360,000
The Government Housing Loan Corporation			1.30-1.90	%		2000-2001		2010-2011		711,600
Agriculture, Forestry and Fisheries Finance Corporation			0.50-1.30	%		2001-2002		2006-2012		28,000
Japan Finance Corporation for Small Business			0.30-4.60	%		1993-2003		2003-2013		2,540,100
Japan Finance Corporation for Municipal Enterprises			0.80-5.10	%		1993-2003		2003-2013		16,712,160
Development Bank of Japan			0.80-3.10	%		1996-2003		2006-2013		320,000
Japan Highway Public Corporation			1.00-5.10	%		1993-2002		2003-2012		6,383,530
Metropolitan Expressway Public Corporation			2.00-4.70	%		1994-1999		2004-2009		207,860
Water Resources Development Public Corporation			2.60-3.40	%		1995-1997		2005-2007		50,000
Hanshin Expressway Public Corporation			2.00-4.60	%		1994-1998		2004-2008		80,150
Japan Railway Construction Public Corporation			1.20-5.00	%		1993-1999		2003-2009		526,306
New Tokyo International Airport Authority			1.00-1.40	%		2002		2012		24,652
Japan National Oil Corporation			1.90-4.70	%		1993-1999		2003-2009		248,234
Honshu-Shikoku Bridge Authority			2.00-4.70	%		1994-1999		2004-2009		120,250
Housing and Urban Development Corporation			1.90-4.70	%		1993-1999		2003-2009		360,050
Social Welfare and Medical Service Corporation			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
Metal Mining Agency of Japan			2.00-4.70	%		1993-1998		2003-2008		18,782
Corporation for Advanced Transport & Technology			2.60-4.70	%		1993-1997		2003-2007		391,320
Deposit Insurance Corporation of Japan			0.10-1.00	%		1999-2003		2003-2007		6,120,000
Electric Power Development Co., Ltd.			1.10-4.70	%		1994-2001		2004-2011		586,240
Kansai International Airport Co., Ltd.			1.20-5.10	%		1993-2002		2003-2012		323,400
Trans-Tokyo Bay Highway Corporation			2.10-5.10	%		1993-1997		2003-2007		374,090
Organization for Promoting Urban Development			0.80-4.60	%		1994-2003		2004-2013		9,215
Central Japan International Airport Co., Ltd.			0.80-2.10	%		1999-2003		2009-2013		205,010

	Total								¥	36,765,969

2. Borrowings of Government-Affiliated Corporations
Japan National Oil Corporation			0.552-1.900	%		2000-2003		2003-2005	¥	1,564,574
Metal Mining Agency of Japan			0.760-1.900	%		1999-2003		2004-2006		11,950
Power Reactor and Nuclear Fuel Development Corp.			0.743-2.100	%		2002-2003		2004-2006		24,679
Japan Environment Corporation			0.508-0.700	%		2002-2003		2004-2005		2,500
Farmers Pension Fund			1.291-1.300	%		2002		2007		56,047
Corporation for Advanced Transport & Technology			0.5038-1.175	%		2002-2003		2003-2004		37,000
Deposit Insurance Corporation of Japan			0.018-0.169	%		2002-2003		2003-2004		14,753,600
The Airport Environment Improvement Authority			0.863-2.300	%		2000-2003		2004-2007		980
Life Insurance Policyholders Protection Corporation of Japan			0.420-0.440	%		2001		2005		136,000
Organization for Promoting Urban Development			0.803-2.000	%		2000-2003		2003-2006		779,470
Banks’ Shareholdings Purchase Corporation			0.025-0.160	%		2002-2003		2003-2004		187,003

	Total								¥	17,553,804

	Total Internal Debt Guaranteed by the Japanese Government								¥	54,319,773


								Principal Amounts		Principal Amounts
								Outstanding as of		Outstanding as of
								March 31, 2003		March 31, 2003
	Interest			Year of Loan		Year of Maturity		(in thousands)		(in thousands)

Development Bank of Japan		6.875	%		1999		2011		$750,000	€	—
		7.375-9.125	%		1995-1996		2003-2005		£450,000		—
		3.000-4.500	%		1993-1998		2003-2005		SFr340,000		—
		5.875-7.500	%		1995-1996		2003-2005		DM300,000		153,388
		5.625	%		2001		2011		€750,000		750,000
		1.400-2.875	%		1996-2003		2006-2028		¥355,000,000		—
Japan Bank for International Cooperation		6.250-8.250	%		1993-2001		2004-2009		$5,600,000		—
		4.625	%		1998		2003		€500,000		500,000
		0.350-4.375	%		1993-2003		2003-2008		¥225,000,000		—
		5.750-7.750	%		1993-1997		2003-2007		DM2,350,000		1,201,536
		8.000	%		1997		2007		£400,000		—
		5.750-6.625	%		1996-1997		2007-2008		FFr3,500,000		533,572
Japan Finance Corporation for Municipal Enterprises		5.875-7.500	%		1993-2001		2003-2011		$3,500,000		—
		3.000-5.500	%		1993-1998		2003-2008		SFr760,000		—
		5.000-7.750	%		1993-1998		2003-2008		DM1,000,000		511,292
		6.750-9.125	%		1994-1999		2004-2019		£530,000		—
		5.750	%		1997		2007		DFL300,000		136,134
		5.875	%		1997		2007		FFr1,000,000		152,449
		6.750	%		1997		2007		NZ$100,000		—
		1.550	%		2002		2012		¥200,000,000		—
		3.625	%		1999		2004		€500,000		500,000
Japan Finance Corporation for Small Business	floating rate				2002		2009		€300,000		300,000
Japan Highway Public Corporation		3.375-7.625	%		1994-2003		2004-2008		$3,850,000		—
		4.500	%		1993		2003		SFr450,000		—
The Metropolis of Tokyo		5.500-7.875	%		1993-2001		2003-2011		$1,770,000		—
		5.750	%		1997		2007		FFr1,700,000		259,163
		4.500	%		1999		2009		€150,000		150,000
Yokohama City		3.250-3.750	%		1997-1999		2007-2009		SFr235,000		—
		6.250-7.625	%		1993-1999		2003-2009		$970,000		—
Kobe City		6.375-6.500	%		1993-1995		2003-2005		$470,000		—
		9.500	%		1994		2004		£200,000		—
Electric Power Development Co., Ltd.		5.625	%		1997		2007		FFr1,800,000		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		—
		8.000	%		1993		2003		Can$200,000		—
		7.375	%		1997		2007		£115,000		—
		3.250	%		1998		2005		SFr220,000		—
		1.300	%		1999		2004		¥20,000,000		—
Trans-Tokyo Bay Highway Corporation		5.750-8.375	%		1993-1996		2003-2006		$600,000		—
		3.750-4.000	%		1996-1997		2006-2007		SFr390,000		—

	Totals by currency								$17,710,000	€	—
									SFr2,395,000		—
									DM3,650,000		1,866,216
									FFr8,000,000		1,219,592
									£1,695,000		—
									€2,450,000		2,450,000
									Can$200,000		—
									¥838,000,000		—
									DFL300,000		136,134
									NZ$100,000		—

										€	5,671,942

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, 2003.


		House of
		Representatives

Liberal Democratic Party			244
Democratic Party of Japan and Club of Independents			115
New Komeito			31
Liberal Party			22
Japanese Communist Party			20
Social Democratic Party			18
New Conservative Party			10
Takeru			2
Independents			13
Vacancies			5

	Total		480


		House of
		Councillors

Liberal Democratic Party - New Conservative Party			116
The Democratic Party of Japan and The Shin-Ryokufukai			60
New Komeito			23
Japanese Communist Party			20
Parliamentary Innovation Club			13
Social Democratic Party			6
Greens			2
Independents			6
Vacancy			1

	Total		247

(a)		Constant prices are based on calendar year 1995.
(b)		Figures of JFY 2001 and 2002 are provisional.
Source: Cabinet Office, The 2^nd Preliminary Estimate of National Expenditure Jan. — Mar. 2003.


		First			Second			Third			Fourth
		Quarter			Quarter			Quarter			Quarter

					(yen amounts in billions)
Gross Domestic Product at Current Prices			¥ 499,622			¥ 501,151			¥ 498,329			¥ 497,296

Gross Domestic Product at Constant Prices(b)			¥ 536,698			¥ 540,499			¥ 542,999			¥ 544,791

Percentage Changes of GDP from Corresponding Quarter of Previous Year(c)
	At Current Prices		-2.0	%		-0.4	%		-0.1	%		-0.6	%
	At Constant Prices(b)		-0.3			1.5			2.5			2.8
	Deflator		-1.4			-1.9			-2.4			-3.5

(a)		JFY 2002 numbers are provisional.
(b)		Constant prices are based on calendar year 1995.
(c)		Figures for the previous year were recalculated using the new valuation method applied after April 2002.
Source: Cabinet Office, The 2nd Preliminary Estimate of National Expenditure Jan. — Mar. 2003.


	Total Primary			Sources of Primary Energy Supplied
	Energy Supplied
JFY	(peta-joule)		Oil		Coal		Nuclear		Natural Gas		Other

1997		23,392		53.6		16.9		12.9		11.6		5.1
1998		22,810		52.4		16.4		13.7		12.3		5.2
1999		22,968		52.1		17.3		13.0		12.7		4.9
2000		23,385		51.8		17.9		12.4		13.1		4.8
2001		22,913		49.1		19.0		12.6		13.6		5.7

(a)		At the end of fiscal year — March 31.
Source: Agency of Natural Resources and Energy, Hand Book of Electric Power Industry.


	Corporate Goods Price				Consumer Price
	Index(a)				Index(b)

			Annual				Annual
	Index		% Change		Index		% Change

1998		101.5		-1.5		101.0		0.6
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

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


						Industrial
	Wage Index(a)					Production Index(b)

			Annual					Annual
	Index		% Change			Index		% Change

1998		100.7		-1.3	%		94.4		-6.9	%
1999		99.4		-1.3			94.6		0.2
2000		100.0		0.5			100.0		5.7
2001		98.9		-1.1			93.2		-6.8
2002		96.5		-2.4			91.9		-1.4

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


													Terms of
	Value Index(a)				Quantum Index(a)				Unit Value(a) Index				Trade(b)

	Exports		Imports		Exports		Imports		Exports		Imports		Index

1998		121.9		116.2		111.6		101.7		109.2		114.3		95.6
1999		114.5		111.8		114.0		111.4		100.4		100.3		100.1
2000		124.4		129.8		124.8		123.7		99.7		104.9		95.0
2001		117.9		134.4		112.1		121.9		105.2		110.3		95.4
2002		125.5		133.8		121.4		123.9		103.3		108.1		95.6

(a)		Calendar year 1995=100.
(b)		Unit value index of exports divided by unit value index of imports, multiplied by 100.
Source: Japan Tariff Association, The Summary Report on Trade of Japan.

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


					IMF		Special
			Foreign		Reserve		Drawing
As of December 31,	Gold(b)		Exchange		Position		Rights		Total

	(in millions)
1998	$	1,194	$	203,215	$	8,877	$	2,663	$	215,949
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


	JFY		JFY		JFY		JFY		JFY
	1998		1999		2000		2001		2002

Volume of imports (thousand kilo-liters per day)		695		688		689		652		671
Cost of imports (c.i.f. in billions of yen)	¥	2,618	¥	3,644	¥	4,931	¥	4,435	¥	5,148
Average price (c.i.f. in yen kilo-liters)	¥	10,319	¥	14,518	¥	19,617	¥	18,645	¥	21,026


			JFY		JFY		JFY		JFY		JFY
			1997		1998		1999		2000		2001

Electric power generating capacity(a):			(megawatts)
	Fossil Fuel			152,202		159,054		161,869		166,648		168,729
	Nuclear			45,248		45,248		45,248		45,248		45,907
	Hydro-electric			44,462		45,382		45,860		46,324		46,387
	Other			534		606		567		617		708

		Total		242,446		250,290		253,544		258,837		261,730

Electric power generation:			(thousands of megawatt-hours)
	Fossil Fuel			614,576		607,815		650,448		669,177		658,475
	Nuclear			319,177		332,343		316,616		322,050		319,859
	Hydro-electric			100,369		102,587		95,577		96,817		93,872
	Other			3,768		3,543		3,488		3,457		3,683

		Total		1,037,890		1,046,288		1,066,130		1,091,500		1,075,890


	1998		1999		2000		2001		2002

Average (Central Rate)	¥	131.02	¥	113.94	¥	107.78	¥	121.58	¥	125.14
High		147.64		124.75		114.98		132.08		135.04
Low		113.81		101.35		101.46		113.57		115.63


									Monetary Base										Loan and Discounts
									Average Amounts										Domestically
			Discount Rate(a)						Outstanding					Money (Stock)(b)					Licensed Banks
	Current
	Account										Annual					Annual					Annual
	Balance		High			Low			Total		% Change			Total(c)		% Change			Total(d)		% Change

	(yen amounts in billions)
1998	¥	3,704		0.50	%		0.50	%	¥	55,858		8.6	%	¥	594,388		4.4	%	¥	488,820		-0.9	%
1999		4,819		0.50			0.50			59,938		7.3			616,265		3.7			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			647,118		2.8			448,223		-3.4
2002		16,387		0.10			0.10			87,111		25.7			668,515		3.3			431,643		-3.7

(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.

(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: Bank of Japan, Financial and Economic Statistics Monthly.

(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.

(a)		The JFY 1999 budget, includes a reversal of funds to make up for deficits incurred in connection with the JFY 1997 settlement of accounts.
(b)		The JFY 2002 revised budget includes a reversal of funds to make up for deficits incurred in connection with the JFY 2001 settlement of accounts.

(a)		Without adjustment for inter-account transactions.
(b)		Removed from the national budget as the postal services were reorganized into a public corporation effective April 1, 2003.


	Funded
					Floating
At the end of JFY	Internal		External		Internal

	(in billions)		(in thousands)		(in billions)
1998	¥	360,156		—	¥	77,398
1999		380,246		—		109,124
2000		414,596		—		120,991
2001		478,233		—		129,079
2002		526,058		—		142,702

(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.


Organization	Subscription Amount

	(in millions)
International Monetary Fund	$	18,289	(a)
International Bank for Reconstruction and Development		15,321	(b)
International Development Association		24,138	(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		7,480	(g)
African Development Bank		1,600	(h)
African Development Fund		2,038	(h)
European Bank for Reconstruction and Development		1,789	(i)
Inter-American Development Bank		5,621	(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, 2002.
(d)		As stated in IFC Financial Statements as of June 30, 2002.
(e)		Contributed.
(f)		As stated in MIGA Financial Statements as of June 30, 2002.
(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, 2002.
(i)		Equivalent of €1,703.50 million. The amount in US dollar as of December 31, 2002, the end of the fiscal year of the EBRD.
(j)		Includes $5,050 million as a subscription to ordinary capital and $571 million as a contribution to the IADB’s Fund for Special Operations. As stated in IDB Financial Statements as of December 31, 2002.
(k)		As stated in IIC Financial Statements as of December 31, 2002.