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Thursday, March 23, 2006

LDP offers deficit-trimming tips

Land sales, loan securitization, landmark renting suggested


Staff writer

Japan can cut its deficit by more than 100 trillion yen in five years by allowing firms to put their names on landmarks like the Rainbow Bridge, selling off prime land and securitizing state loans, a Liberal Democratic Party fiscal reform subpanel said Wednesday.

Two money-making ideas proposed in the subpanel's interim report were for the government to put ads on cars used to chauffeur politicians and senior civil servants around town, and to have companies bid for advertising space on high-profile properties such as highways, Tokyo's National Stadium and the Akashi Kaikyo Bridge.

"We think we could get a company to pay at least 100 million yen a year to put their name on National Stadium," said panel member Ichiro Kamoshita. "I doubt anyone would be willing to pay 1 billion yen, but who knows?"

The state could also sell off 2 trillion yen in civil-servant residences and other government facilities nationwide and securitize over 100 trillion yen of the loans it has made to government affiliates, the paper says.

Among other ideas, the panel recommends selling off government housing acquired before 1982, small apartments on properties measuring 3,000 sq. meters or less, and little-used government facilities. Liquidating all such properties nationwide would add 1.4 trillion yen to government coffers, the subpanel said.

The Finance Ministry has said government housing in Tokyo sits on 532 billion yen worth of land in the 23 wards alone. As of January, those facilities could house a combined 21,901 families, but occupancy in September was only about 50 percent.

Experts have estimated the government can sell off 430 trillion yen in assets without hurting the quality of state services.

The trickiest part of the blueprint to implement is securitizing government loans.

The government issues "zaito" bonds under the Fiscal Loan and Investment Program to raise funds, which are then used to provide loans to state-backed corporations and other entities for public-works projects.

Wednesday's plan suggests bundling and securitizing these loans, and selling the bundles to institutional investors who hold Japanese government bonds.

The loan bundles would help cancel out outstanding JGB issues, thus reducing the overall size of the deficit.

Wednesday's paper recommends setting up a panel of outside experts to determine the most efficient ways to securitize assets.

The loans under consideration include 11 trillion yen to the Development Bank of Japan, 33 trillion yen to Japan Post and 71 trillion yen to local government entities.

The loans would be chosen from financially sound projects, Kamoshita promised.

This new group would also choose from among public- and private-sector requests to lease government land.

By leasing and selling property to the private sector, the subpanel hopes to earn or save a total of 10 trillion yen over five years, it said.

To do so, the state will provide land prices for assets the private sector might be interested in. For instance, Kumamoto airport sits on 1.7 million sq. meters of land worth 3.4 billion yen, while the airport itself cost 628.8 million yen, the report states.

The government sees downsizing the budget as an imperative, with the national debt at roughly 170 percent of the gross domestic product in 2005 and climbing. The economic recovery also will push up interest rates, hiking the interest payments on the debt.



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The Japan Times

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