Japan to top up fiscal loans, investments to boost supply chain

Shoppers are seen at Nishiki Market in Kyoto, western Japan June 18, 2022. Picture taken June 18, 2022. REUTERS/Satoshi Sugiyama/File photo

TOKYO  -Japan’s government is set to increase its fiscal loan and investment program in a planned second extra budget to beef up supply chains and other long-term spending, according to a draft of the plan reviewed by Reuters on Friday.

Fiscal investment and loan programs involve the issuance of bonds based on the credit of the government, which are redeemed by government-affiliated agencies, to carry out large-scale projects that are deemed difficult for the private sector to tackle by providing long-term and low-interest funding.

Under the plan, the program will generate additional funding of 886 billion yen ($5.85 billion), according the draft document from the Ministry of Finance.

With that funding, the government would boost financial support through government-affiliated financial institutions to enhance the supply of chips and by constructing advanced logistic facilities and data centres, the draft document showed.

The government would also provide funding of 150 billion yen for power grid developments that will help supply more renewable energy, the document said.

With the additional funding, the spending and loan programmes would be revised to 17.2 trillion yen, up from the initial 16.3 trillion yen for this fiscal year, which will be decided by the cabinet on Friday.

The government also aims to secure vital resources from the developing countries of the “global south” to help Japanese firms enhance their supply networks. To achieve this, the government will add 300 billion yen in financial support through Japan Bank of International Cooperation (JBIC).

Japan will also provide yen loans worth 406 billion yen for infrastructure exports to promote coordination with developing countries.

($1 = 151.3300 yen)