The Ministry of Finance (MOF) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) have begun making arrangements to lend money that the government will procure at low interest rates for improving expressways and Kansai International Airport. The plan will be included in the government’s draft budget for fiscal 2019. The ministries will provide loans of about 1.15 trillion yen to an independent administrative agency that manages loans pertaining to expressways, among others. The government also promoted the improvement of expressways by utilizing state financial funds last year. It aims to take advantage of a low-interest rate environment in developing infrastructure.
The government will capitalize on the “Fiscal Loan Fund” system, which is designed to raise money by issuing government bonds. The MOF, in light of the MLIT’s requests, will include the loan program in the fiscal investment and loan program for fiscal 2019 to be finalized in late December. But injecting a large amount of state financial funds could result in lax profitability management for infrastructure.
The plan being considered would lend one trillion yen to the Japan Expressway Holding and Debt Repayment Agency (JEHDRA), an independent administrative institution, for 40 years at an annual fixed interest rate of 1%. The low-interest rate loan will reduce the JEHDRA’s interest payments and allow the agency to instead promote the project to increase the number of traffic lanes on the Shin-Meishin Expressway to six for more efficient logistics.
The government will also provide a loan of 150 billion yen to the company that manages Kansai International Airport, which was forced to shut down temporarily due to the damage caused by the Typhoon No.21, under the same conditions. (Abridged)