Form 424B5 Japan Bank for Internati

May 19, 2022 6:18 AM EDT

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Filed pursuant to Rule 424(b)(5)
Registration Number 333-250107

The information in this preliminary prospectus supplement and the SEC Base Prospectus is not complete and may be changed. This preliminary prospectus supplement and the SEC Base Prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. A final form prospectus will be prepared and made available. Investors should not subscribe for any securities referred to in this document except on the basis of information contained in the final form prospectus.

Subject to Completion Dated May 19, 2022

PROSPECTUS SUPPLEMENT TO SEC BASE PROSPECTUS DATED January 5, 2021

LOGO

Japan Bank for International Cooperation

(Incorporated under the Japan Bank for International Cooperation Act)

€● ●% Guaranteed Bonds Due ●

Unconditionally and Irrevocably Guaranteed

as to Payment of Principal and Interest by

Japan

We will pay interest on the €● ●% guaranteed bonds due ● (the “bonds”) annually in arrears in equal payments on ● of each year, commencing ●, 2023. The bonds will mature on ●. We may redeem all, but not less than all, of the bonds in the event of certain tax law changes. The redemption terms are described in this prospectus supplement dated ●, 2022 (this “Supplement”) under “Description of the Bonds and Guarantee—Redemption”. The bonds will be issued only in registered form in denominations of €100,000 and integral multiples of €1,000 in excess thereof. See “Description of the Bonds and Guarantee”.

As provided under the heading “Luxembourg Stock Exchange Approved Prospectus” on page S-5 of this Supplement, subject to approval by the Luxembourg Stock Exchange, certain parts (but not all) of this Supplement and the accompanying prospectus dated January 5, 2021, starting after page S-73 (the “SEC Base Prospectus”), as well as the documents incorporated by reference into this Supplement or the SEC Base Prospectus, constitute a prospectus for the purposes of the Luxembourg act dated July 16, 2019 (the “Luxembourg Act”). The parts of this Supplement and the SEC Base Prospectus and those documents incorporated by reference into this Supplement that together constitute a “prospectus” for the purposes of the Luxembourg Act are referred to herein as the “LSE Approved Prospectus” and are identified under the heading “Luxembourg Stock Exchange Approved Prospectus” on page S-5 of this Supplement.

Application has been made to admit the bonds to the official list of the Luxembourg Stock Exchange and application has been made to admit the bonds to trading on the Luxembourg Stock Exchange’s Euro MTF Market (the “Euro MTF Market”). The Euro MTF Market is not a regulated market for the purposes of the Markets in Financial Instruments Directive 2014/65/EU (as amended or superseded, “MiFID II”). References in this prospectus to the bonds being “listed” (and all related references) shall mean that the bonds have been admitted to the official list of the Luxembourg Stock Exchange and admitted to trading on the Euro MTF Market.

Neither the United States Securities and Exchange Commission (the “Commission”) nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Supplement or the SEC Base Prospectus. Any representation to the contrary is a criminal offense.

Prospective investors should consider carefully the factors described under the section headed “Risk Factors ” in this Supplement.


	Per Bond		Total
Price to Public⁽¹⁾	●	%		●
Underwriting Discount	●	%		●
Proceeds, before expenses, to JBIC⁽¹⁾⁽²⁾	●	%		●

(1)	Plus accrued interest, if any, from ●, 2022, if settlement occurs after that date.

(2)	See “Underwriting”.

The underwriters are offering the bonds subject to various conditions. The bonds will initially be represented by a fully registered global bond, which will be delivered to, and registered in the name of a nominee of, a common safekeeper (“Common Safekeeper”) for Euroclear Bank SA/NV (“Euroclear”) or Clearstream Banking S.A. (“Clearstream” and, together with Euroclear, the international central securities depositaries or “ICSDs”). It is expected that delivery of the global bond(s) will be made on or about ●, 2022 or such later date as may be agreed by us and the underwriters.

The bonds are intended to be held in a manner which will allow Eurosystem eligibility. This simply means that the bonds are intended upon issue to be deposited with one of the ICSDs as Common Safekeeper (and registered in the name of a nominee of one of the ICSDs acting as Common Safekeeper) and does not necessarily mean that the bonds will be recognized as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.


Citigroup		Crédit Agricole CIB		Daiwa Capital Markets Europe		Goldman Sachs International

Prospectus Supplement dated ●, 2022.

TABLE OF CONTENTS

Supplement


	Page
Foreign Exchange Considerations		S-7
Forward-Looking Statements		S-7
Incorporation by Reference		S-8
Introduction		S-9
Risk Factors		S-11
Recent Developments		S-15
Summary Financial Information		S-43
Use of Proceeds		S-47
Description of the Bonds and Guarantee		S-48
Global Clearance and Settlement		S-55
Taxation		S-59
Underwriting		S-67
Validity of Securities		S-70
Authorized Agents in the United States		S-70
General Information		S-71

SEC Base Prospectus


About This Prospectus			ii
Where You Can Find More Information			1
Japan Bank for International Cooperation			2
Japan			18
Financial System			43
Government Finance			47
Use of Proceeds			63
Description of the Debt Securities and Guarantee			64
Plan of Distribution			74
Authorized Agents in the United States			75
Validity of Securities			75
Further Information			75
Annex I: Summary Financial Information			77

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The bonds have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended) and the bonds are subject to the Act on Special Measures Concerning Taxation of Japan (Act No. 26 of 1957, as amended). The bonds may not be offered or sold in Japan to any other person resident in Japan, or to others for reoffering or resale directly or indirectly in Japan or to a person resident in Japan, for Japanese securities law purposes (including any corporation or other entity organized under the laws of Japan), except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act of Japan and any other applicable laws, regulations and governmental guidelines of Japan (see “Underwriting” below). The bonds are not, as part of the distribution under the underwriting agreement at any time, to be directly or indirectly offered or sold to, or for the benefit of, any person other than a beneficial owner that is, (i) for Japanese tax purposes, neither (x) an individual resident of Japan or a Japanese corporation, nor (y) an individual non-resident of Japan or a non-Japanese corporation that in either case is a person having a special relationship with JBIC (that is, in general terms, a person who directly or indirectly controls or is directly or indirectly controlled by, or is under direct or indirect common control with, JBIC) as described in Article 6, Paragraph (4) of the Act on Special Measures Concerning Taxation of Japan (a “Specially-Related Party of JBIC”) or (ii) a Japanese financial institution, designated in Article 6, Paragraph (11) of the Act on Special Measures Concerning Taxation of Japan. BY SUBSCRIBING FOR THE BONDS, AN INVESTOR WILL BE DEEMED TO HAVE REPRESENTED IT IS A PERSON WHO FALLS INTO THE CATEGORY OF (i) OR (ii) ABOVE.

In addition, interest payments on the bonds will generally be subject to Japanese withholding tax unless it is established that such bonds are held by or for the account of a beneficial owner that is (i) for Japanese tax purposes, neither (x) an individual resident of Japan or a Japanese corporation, nor (y) an individual non-resident of Japan or a non-Japanese corporation that in either case is a Specially-Related Party of JBIC, (ii) a Japanese financial institution designated in Article 6, Paragraph (11) of the Act on Special Measures Concerning Taxation of Japan which complies with the requirement for tax exemption under that paragraph, or (iii) a Japanese public corporation, a Japanese financial institution or a Japanese financial instruments business operator, etc. described in Article 3-3, Paragraph (6) of the Act on Special Measures Concerning Taxation of Japan which complies with the requirement for tax exemption under that paragraph.

You should rely only on the information contained or incorporated by reference in this Supplement and the SEC Base Prospectus and, for the purposes of the LSE Approved Prospectus, the documents incorporated by reference therein. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in the LSE Approved Prospectus or otherwise in this Supplement or the SEC Base Prospectus is accurate as of any date other than the date on the front page of this Supplement or, with respect to information incorporated by reference, as of the date of such information.

In this Supplement, “we”, “our”, “us” and “JBIC” refer to Japan Bank for International Cooperation.

The spot buying rate for U.S. dollars quoted on the Tokyo foreign exchange market on ●, 2022, as reported by the Bank of Japan (the “BOJ”) at 5:00 p.m., Tokyo time, was ¥● = $1.00. The noon buying rates for yen and euro on ●, 2022 for cable transfers in New York City payable in yen and euro, as reported by the Federal Reserve Bank of New York, were $1.00 = ¥● and €1.00 = $●. The spot exchange rate for Japanese yen on ●, 2022, as observed by the European Central Bank at approximately 4:00 p.m., Central European Time, was ¥● = €●.

References in this Supplement 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. References to “¥”or “yen” are to Japanese yen; references to “€” are to euro and references to “$” are to U.S. dollars.

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The distribution of this Supplement and the SEC Base Prospectus and the offering of the bonds in certain jurisdictions may be restricted by law.

The bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended or superseded, the “IDD”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended or superseded, the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended or superseded, the “PRIIPs Regulation”) for offering or selling the bonds or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the bonds or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

The bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the “EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the “FSMA”) and any rules or regulations made under the FSMA to implement the IDD, where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA (the “UK Prospectus Regulation”). Consequently, no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the bonds or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the bonds or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.

This Supplement and the SEC Base Prospectus do not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. See “Underwriting”.

This Supplement and the SEC Base Prospectus have been prepared on the basis that all offers of bonds in (i) any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation or (ii) in the United Kingdom will be made pursuant to an exemption under the FSMA, in each case from the requirement to produce and publish a prospectus for offers of the bonds. Accordingly, any person making or intending to make any offer in a Member State or in the United Kingdom of the bonds which are the subject of the placement referred to in this Supplement and the SEC Base Prospectus may only do so in circumstances in which no obligation arises for JBIC or the underwriters to produce and publish a prospectus (i) in relation to a Member State of the EEA, pursuant to Article 3 of the Prospectus Regulation, or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation, or (ii) in relation to the United Kingdom, pursuant to section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation, in each case in relation to such offer. Neither JBIC, Japan nor the underwriters have authorized, nor do they authorize, the making of any offer of the bonds in circumstances in which an obligation arises for JBIC or the underwriters to publish a prospectus or supplement a prospectus for such offer. JBIC and Japan have not authorized and do not authorize the making of any offer of the bonds through any financial intermediary, other than offers made by the underwriters resulting in sales constituting the final placement of the bonds contemplated in this Supplement and the SEC Base Prospectus.

Solely for the purposes of each manufacturer’s product approval process, the target market assessment in respect of the bonds has led to the conclusion that: (i) the target market for the bonds is only eligible

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counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook, and professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA (“UK MiFIR”); and (ii) all channels for distribution of the bonds to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the bonds (a “distributor”) should take into consideration the manufacturers’ target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the bonds (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels.

Solely for the purposes of the manufacturer’s product approval process, the target market assessment in respect of the bonds has led to the conclusion that: (i) the target market for the bonds is eligible counterparties and professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the bonds to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the bonds (a “distributor”) should take into consideration the manufacturer’s target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the bonds (by either adopting or refining the manufacturer’s target market assessment) and determining appropriate distribution channels.

In the United Kingdom, this Supplement and the SEC Base Prospectus are only being distributed to and are only directed at persons who (i) have professional experience in matters relating to investments who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended or superseded, the “Order”); (ii) are persons who fall within Article 49(2)(a)-(d) of the Order; or (iii) are persons to whom an invitation or inducement to engage in an investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any bonds may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). In the United Kingdom this Supplement and the SEC Base Prospectus and any of their contents are directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this Supplement and the SEC Base Prospectus relate is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

In connection with the issue of the bonds, Daiwa Capital Markets Europe Limited (the “Stabilizing Manager”) (or any persons acting on behalf of the Stabilizing Manager) may overallot the bonds or effect transactions with a view to supporting the market price of the bonds at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilizing Manager (or persons acting on behalf of the Stabilizing Manager) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the bonds is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the bonds and 60 days after the date of the allotment of the bonds. Any stabilization action or over-allotment must be conducted by the Stabilizing Manager (or persons acting on behalf of the Stabilizing Manager) in accordance with all applicable laws and rules.

Luxembourg Stock Exchange Approved Prospectus

Subject to approval by the Luxembourg Stock Exchange, this Supplement and the SEC Base Prospectus starting after page S-73 including the following documents incorporated by reference:

•

the Annual Report on Form 18-K of Japan for the year ended March 31, 2021 (the “Japan 18-K 2021”);

•

JBIC’s Annual Report on Form 18-K for the year ended March 31, 2021 (the “JBIC 18-K 2021”) which is otherwise incorporated into this Supplement and the SEC Base Prospectus;

•

Amendment No. 1 to the JBIC 18-K 2021 which is otherwise incorporated into this Supplement and the SEC Base Prospectus;

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•

Amendment No. 2 to the JBIC 18-K 2021 which is otherwise incorporated into this Supplement and the SEC Base Prospectus; and

•

Amendment No. 3 to the JBIC 18-K 2021 which is otherwise incorporated into this Supplement and the SEC Base Prospectus.

but excluding the following:

•

the section “Where You Can Find More Information” in the SEC Base Prospectus,

together comprise the LSE Approved Prospectus and for the purpose of giving information with regard to us, Japan and our bonds which, according to the particular nature of us, Japan and our bonds, is necessary to enable investors to make an informed assessment of our and Japan’s assets and liabilities, financial position, profit and losses and prospects, and of the rights attaching to our bonds and the guarantee. This LSE Approved Prospectus may only be used for this foregoing purpose.

Responsibility for Statements

We accept responsibility for the information contained in the LSE Approved Prospectus. To the best of our knowledge (having taken all reasonable care to ensure that such is the case) the information contained in the LSE Approved Prospectus is in accordance with the facts and contains no omission likely to affect its import.

Japan accepts responsibility for the information contained in the LSE Approved Prospectus relating to Japan and the guarantee. To the best of Japan’s knowledge (having taken all reasonable care to ensure that such is the case) the information contained in the LSE Approved Prospectus relating to Japan and the guarantee is in accordance with the facts and contains no omission likely to affect its import.

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FOREIGN EXCHANGE CONSIDERATIONS

For an investor that is not resident in the Eurozone or does not conduct business or activities in the Eurozone, an investment in the bonds, which are denominated in, and all payments in respect of which are to be made in, euro entails significant risks not associated with a similar investment in a security denominated in the investor’s home currency (i.e., the currency of the country in which the investor is resident or the currency in which the investor conducts its business or activities). These include the possibility of:

•

significant changes in rates of exchange between the home currency and the euro; and

•

the imposition or modification of foreign exchange controls with respect to the euro.

We have no control over a number of factors affecting this type of bond, including economic, financial and political events that are important in determining the existence, magnitude and longevity of these risks and their results. In recent years, rates of exchange for certain currencies, including the euro, have been volatile and this volatility may be expected to continue in the future. Fluctuations in any particular exchange rate that have occurred in the past are not necessarily indicative of fluctuations in the rate that may occur during the term of the bonds. Depreciations of the euro against the investor’s home currency could result in a decrease in the investor’s effective yield of the bonds below the coupon rate, and in certain circumstances, could result in a loss to such purchaser on a home currency basis.

The description of foreign currency risks does not describe all the risks of an investment in securities denominated in a currency other than your home currency. Prospective investors should consult their own financial and legal advisors as to the risks involved in an investment in such bonds.

FORWARD-LOOKING STATEMENTS

This Supplement and the SEC Base Prospectus (including the documents incorporated by reference herein and therein) include forward-looking statements. Forward-looking statements are statements that are not historical facts, including statements about beliefs and expectations, and generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe”, “continue”, “could”, “should”, “would” or similar terminology. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any of such statements in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties, including but not limited to those discussed under “Risk Factors” and elsewhere in this Supplement and the SEC Base Prospectus (including the documents incorporated by reference herein and therein), and actual results may differ materially from those expressed or implied in any forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements.

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INCORPORATION BY REFERENCE

The Japan 18-K 2021, JBIC 18-K 2021, Amendment No.1 to the JBIC 18-K 2021, Amendment No. 2 to the JBIC 18-K 2021 and Amendment No. 3 to the JBIC 18-K are hereby incorporated by reference and form part of this Supplement.

Any statement contained in a document which is incorporated by reference in the LSE Approved Prospectus or otherwise in this Supplement or the SEC Base Prospectus shall be deemed to be modified or superseded for the purpose of the LSE Approved Prospectus or this Supplement to the extent that a statement contained herein or another document incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the LSE Approved Prospectus or this Supplement. Copies of the documents incorporated by reference in the LSE Approved Prospectus or otherwise in this Supplement or the SEC Base Prospectus are available free of charge at the office of the fiscal agent in London, and will also be available at the website of the Luxembourg Stock Exchange (www.bourse.lu).

The following audited financial statements of JBIC for the fiscal year ended March 31, 2021, prepared in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”), appear on the pages of the JBIC 18-K 2021 as set forth below:


(a) Consolidated statements of operations		Set forth on page 7 of Exhibit 2 of the JBIC 18-K 2021
(b) Consolidated balance sheets		Set forth on page 6 of Exhibit 2 of the JBIC 18-K 2021
(c) Consolidated statements of cash flows		Set forth on page 11 of Exhibit 2 of the JBIC 18-K 2021

For the purposes of the LSE Approved Prospectus, the information incorporated by reference from the Japan 18-K 2021 includes the following items in relation to Japan (the page numbers below are those of Exhibit 1 to such Annual Report):


Items		Japan 18-K 2021 - Exhibit 1 (Description of Japan)
Geographical location and legal form		“General—Area and Population”, “General—Government” and “General—Political Parties” on pages 4-5

Description of the economy		“The Economy” on pages 8-20

Description of the political system and government		“General—Government”, “General—Political Parties” and “General—Leadership” on pages 4-5

Tax and budgetary systems		“Government Finance” on pages 32-38

Gross public debt and debt record		“Debt Record”, “Japan’s Public Debt”, “Internal Debt” and “External Debt” on pages 38-44

Foreign trade and balance of payments		“Foreign Trade and Balance of Payments—Foreign Trade” and “Foreign Trade and Balance of Payments—Balance of Payments” on pages 21-24

Foreign exchange reserves		“Foreign Trade and Balance of Payments—Balance of Payments—Official Reserve Assets” on page 24

Financial position and resources		“Government Finance” on pages 32-38

Income and expenditure figures		“Government Finance” on pages 32-38

Auditing Procedures		“Government Finance—Revenues, Expenditures and Budgets” on pages 32-36

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INTRODUCTION

The following is an abstract of certain information contained elsewhere in this Supplement or the SEC Base Prospectus or incorporated by reference herein. More detailed information is contained elsewhere in this Supplement or the SEC Base Prospectus or incorporated by reference herein. You should read carefully this entire Supplement, the SEC Base Prospectus and the other documents we refer to for a complete understanding of this offering.

Issuer

Japan Bank for International Cooperation.

Issue Date

The issue date is ●, 2022.

Securities Offered

€● principal amount of ●% Guaranteed Bonds Due ●

Guarantee

Payments of principal of and interest on the bonds are unconditionally and irrevocably guaranteed by Japan.

Maturity Date

●

Interest Payment Dates

Annually on ● of each year, commencing ●, 2023.

Interest Rate

●% per annum, accruing from ●, 2022. Whenever it is necessary to compute interest for a period other than a full year in respect of the bonds, other than with respect to regular annual interest payments, that interest will be calculated on the basis of (i) the actual number of days in the period from and including the date from which interest begins to accrue (the “accrual date”) to but excluding the date on which it falls due, divided by (ii) the actual number of days from and including the accrual date but excluding the next following interest payment date (known as “actual/actual (ICMA)”).

Ranking

The bonds will be our direct, unsecured debt securities obligations and rank pari passu and be payable without any preference among themselves and at least equally with all of our other unsecured debt securities obligations from time to time outstanding, which rank senior to our unsecured general obligations not represented by debt securities, provided, however, that certain obligations in respect of national and local taxes and certain preferential rights granted by, among others, the Japanese Civil Code to certain specified types of creditors, such as preferential rights of employees to wages, will have preference.

Additional Amounts

If certain taxes, as described under “Description of the Bonds and Guarantee”, are payable on the bonds, we will, subject to certain exceptions, pay such additional amounts on the bonds as will result, after deduction or withholding of such taxes, in the payment of the amounts that would have been payable on the bonds if no such deduction or withholding had been required. For further detail on the payment of these additional amounts, see “Description of the Bonds and Guarantee—Additional Amounts”.

Redemption

We may redeem all, but not less than all, of the bonds in the event of certain changes relating to Japanese taxation at 100% of the principal amount thereof plus accrued interest thereon and any additional amounts we are required to pay, as described under “Description of the Bonds and Guarantee—Redemption”.

Markets

We are offering the bonds for sale only in those jurisdictions other than Japan (subject to certain exceptions) where it is legal to make such offers. See “Underwriting” for a description of applicable selling restrictions.

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Listing

We have applied to the Luxembourg Stock Exchange for the bonds to be listed on its official list and for the bonds to be admitted to trading on its Euro MTF Market.

Form and Settlement

The bonds will be issued in registered form in the form of a fully registered global bond in the name of the nominee of a common safekeeper for Euroclear or Clearstream. Except as described in this Supplement, owners of beneficial interests in the bonds will not be entitled to have bonds registered in their names, will not receive or be entitled to receive bonds in definitive form and will not be considered to be holders of bonds under the fiscal agency agreement relating to the bonds. The bonds will be sold only in denominations of €100,000 and integral multiples of €1,000 in excess thereof.

Eurosystem Eligibility

Fiscal Agent, Registrar, Principal Paying Agent and Transfer Agent

MUFG Bank, Ltd., London Branch

The security numbers for the bonds are:


ISIN:		●
Common Code:		●


Legal Entity Identifier		549300TJ3QFYVCTSCJ29

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RISK FACTORS

We believe that the following factors may affect our ability to fulfil our obligations under our bonds. All of these factors are contingencies which may or may not occur and we are not in a position to express a view on the likelihood of any such contingency occurring.

Factors which we believe may be material for the purpose of assessing the market risks associated with our bonds are also described below.

We believe that the factors described below represent the principal risks inherent in investing in our bonds. Prospective investors should carefully consider these factors in conjunction with the detailed information set out elsewhere in this Supplement and the SEC Base Prospectus (including any documents or information incorporated by reference herein) or, for the purposes of the LSE Approved Prospectus, the detailed information set out elsewhere in the LSE Approved Prospectus (including any documents incorporated therein), and reach their own views prior to making any investment decision.

Risks Relating to the Japanese Economy in General

Prospective investors in our bonds should be aware of the challenges faced by the Japanese economy. The Japanese economy continues to face challenges due to uncertainty about the economic prospects of the world economy. In particular, global economic conditions have been significantly impacted due to extensive disruptions in economic activity and volatility in financial markets caused by the global COVID-19 pandemic since December 2019, and the measures implemented in many countries to help contain the spread of the disease. In Japan, the central and local governments imposed a number of such measures, including the declaration of multiple states of emergency and other restrictive measures aimed at preventing the spread of infections. While the number of infections in Japan had subsequently shown a decreasing trend resulting in the easing of a number of preventative measures, the number of infections subsequently increased and have remained high due to the spread of a new COVID-19 variant. Although many preventative measures such as restrictions on international travel have been relaxed, the number of infections continue to be high. Accordingly, additional restrictive measures may be imposed in the future, including the declaration of a state of emergency for all or parts of Japan, based on certain factors such as an increase in infection rates. See “Recent Developments—Japan—The Economy—General” below.

As a result of the COVID-19 outbreak and the measures implemented to contain its spread, Japan and many other major economies reported economic contractions in the first and second quarters of 2020. Although Japan and some other economics have shown signs of recovery since the second half of 2020, many countries continue to report high numbers of infections due to the new COVID-19 variant. In response to the increase in infections, some countries continue to impose lockdown and other restrictive measures, which could have an impact on global economic conditions. Accordingly, the magnitude and duration of the economic impact of COVID-19 remains highly uncertain, and it is possible that another surge in COVID-19 cases could result in a prolonged economic slowdown in Japan and globally, which could differ significantly in terms of severity and duration depending on the country.

The global economy has recently been impacted by Russia’s large-scale military activity against Ukraine that was initiated in February 2022 and the related economic sanctions imposed on certain Russian entities and persons by many major countries. In particular, financial and commodity markets have experienced significant volatility and energy prices have sharply increased mainly due to concerns regarding disruptions in oil and natural gas supply. Depending on how the conflict develops and any additional economic sanctions imposed on Russia, economic conditions in Japan and globally may continue to worsen, and the duration and extent of any economic slowdown is highly uncertain.

Although the Japanese government and the BOJ are pursuing expansive economic measures in an effort to mitigate the impact of the COVID-19 outbreak, including emergency measures aimed at supporting businesses

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and individuals impacted by the outbreak and monetary easing measures implemented by the BOJ, such as the continuation of the BOJ’s negative interest rate policy and framework for quantitative and qualitative monetary easing first introduced in 2016, the effect of such measures remains unclear. In addition, increased spending for economic stimulus measures could negatively impact Japan’s fiscal condition due to higher levels of public debt. Partially in response to the planned increase in public spending in Japan, in June 2020, S&P Global Ratings lowered its outlook on Japan’s sovereign credit rating from positive to stable. In addition, in July 2020, Fitch Ratings lowered its outlook on Japan’s sovereign credit rating from stable to negative. Further challenges for the Japanese economy include volatile exchange rates and, over the long term, demographic challenges, such as an aging workforce and population decrease, and high levels of public debt and associated debt servicing payments. Further slowdowns in overseas economies and sharp fluctuations in the financial and capital markets also pose downside risks to the Japanese economy. In addition, the Japanese economy is also exposed to challenges due to long-term deflation as well as the potential impact of ongoing political disputes, technology and trade tensions between the United States and China and other major trading partners as well as the potential escalation of geopolitical risks associated the Middle East or North Korea.

Risks Relating to Us

General risks relating to our business

The Japan Bank for International Cooperation Act, as amended (the “JBIC Act”), requires the Japanese government, at all times, to hold the total number of outstanding shares of JBIC. JBIC’s operations, including appointment of directors, business plans and issuance of new debt securities, are subject to the supervision of the Japanese government. JBIC’s business operations are conducted in accordance with the Japanese government’s economic and other policies, including the provision of financial support in areas in which it is difficult for private financial institutions to provide on a commercial basis. Accordingly, JBIC’s business operations, results of operations and financial condition have been, and will continue to be, influenced by the Japanese government’s economic and other policies.

In particular, JBIC is subject to governmental regulation pursuant to the JBIC Act in addition to the Companies Act of Japan (Act No. 86 of 2005, as amended). In the future, if these laws are amended in a material way, the operations and other aspects of JBIC may be materially affected.

In addition, our business, financial condition and results of operations may be negatively affected by the spread of COVID-19 and the resulting impact on our borrowers and general economic conditions and financial markets.

Risks relating to transactions with Russian counterparties and compliance with economic sanctions

In light of the ongoing Russian invasion of Ukraine, our business activities with Russian counterparties or involving certain project financing in Russia could subject us to various risks and uncertainties. Due to the broad economic sanctions imposed on Russian entities and persons by the United States, EU, UK, Japan, and other countries worldwide, including, but not limited to, sanctions or other restriction imposed on certain Russian financial institutions and the removal of certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) system (the “Sanctions”), we may experience increased credit risk and defaults on our loans to counterparties in Russia. We currently engage in business involving certain counterparties that are subject to the Sanctions, including, but not limited to, Russian financial institutions such as Sberbank of Russia and Vnesheconombank. We participate in the financing for certain project companies or projects involving entities subject to the Sanctions, including, but not limited to, the Russian Direct Investment Fund. Although we have established policies to ensure that we conduct these activities in compliance with applicable laws and regulations, including applicable sanctions, any actual or perceived failure to comply with applicable laws and regulations could result in regulatory actions against us, damage to our reputation, or other negative consequences. In addition, our participation in transactions with sanctioned entities may lead some

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potential counterparties and investors to avoid doing business with us or investing in our securities. We may be required to, or otherwise decide to, terminate our relationships with, or activities involving, Russian counterparties or other entities, which may result in termination fees or other related costs. As a result of the foregoing, our results of operations and financial condition may be negatively impacted.

Risks Relating to the Market Risk of Bonds Generally

Exchange rate risk

Prospective investors in our bonds should be aware that an investment in our bonds may involve exchange rate risks. Our bonds may be denominated in a currency other than the currency of the investor’s home jurisdiction and/or in a currency other than the currency in which an investor wishes to receive funds. Exchange rates between currencies are determined by factors of supply and demand in the international currency markets which are influenced by macro economic factors, speculation and central bank and government intervention (including the imposition of currency controls and restrictions). Fluctuations in exchange rates may affect the value of our bonds. See “Foreign Exchange Considerations”.

The secondary market generally

Our bonds may have no established trading market when issued, and one may never develop. If a market does develop, it may not be sufficiently liquid. Therefore, investors may not be able to sell their bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Illiquidity may have a severely adverse effect on the market value of our bonds.

Risks Relating to our Bonds

Limited liquidity

The fact that our bonds may be listed does not necessarily assure liquidity. No assurance can be given that there will be a market for our bonds. If our bonds are not traded on any stock exchange, pricing information for such bonds may be more difficult to obtain, and the liquidity and market prices of such bonds may be adversely affected. The liquidity of our bonds may also be affected by restrictions on offers and sales of our bonds in some jurisdictions. The underwriters may from time to time make a market in our bonds but are under no obligation to do so and, if a market does develop, it may not continue until the maturity of all our bonds. The listing application will be subject to approval by the Luxembourg Stock Exchange. If such an approval and listing is obtained, we have no obligation to maintain such listing, and we may delist the bonds at any time.

Eurosystem eligibility may not be achieved

The bonds are intended to be held in a manner which will allow the bonds to be recognized as eligible collateral for Eurosystem monetary policy and intra-day credit operations (“Eurosystem eligibility”). Such Eurosystem eligibility recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met. Should the European Central Bank determine that the bonds satisfy Eurosystem eligibility criteria, the European Central Bank may at any time during the life of the bonds change its Eurosystem eligibility criteria and/or determine that the bonds no longer satisfy Eurosystem eligibility criteria. We have no obligation to maintain Eurosystem eligibility or meet Eurosystem eligibility criteria either upon issue or at any or all times during the life of the bonds.

The bonds permit us to make payments in U.S. dollars if we are unable to obtain euro

If euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or the euro is no longer used by the then-member states of the European Economic and Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the bonds will be made in U.S.

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dollars until euro is again available to us or so used. The amount payable on any date in euro will be converted into U.S. dollars on the basis of the then most recently available market exchange rate for euro. Any payment in respect of the bonds so made in U.S. dollars will not constitute an event of default under the bonds or the fiscal agency agreement governing the bonds. See “Description of the Bonds and Guarantee—Issuance in Euro.”

Bonds subject to optional redemption by us

Redemption of our bonds in circumstances of changes in applicable laws or treaties may limit their market value. During any period when we may elect to redeem our bonds, the market value of our bonds generally will not rise substantially above the price at which they can be redeemed.

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RECENT DEVELOPMENTS

JBIC

Operations

Outstanding Credit in the JBIC Operations

For the three months ended December 31, 2021, JBIC’s total additional disbursed amounts under loans and guarantees on a non-consolidated basis amounted to ¥1,001 billion and collections of loans and guarantees on a non-consolidated basis amounted to ¥661 billion. As of December 31, 2021, JBIC’s outstanding balance of credit commitments on a non-consolidated basis was ¥14,020 billion and JBIC’s outstanding balance of guarantees on a non-consolidated basis was ¥1,755 billion.

Expiration of COVID-19 Emergency Window

On April 30, 2020, as part of the emergency economic measures in response to the COVID-19 outbreak announced by the Prime Minister of Japan on April 20, 2020, JBIC expanded the operations of its Growth Investment Facility to permit financing to Japanese companies for eligible projects and investments in cases where the ability to obtain financing was affected by COVID-19 or where the project or investment is related to the prevention of COVID-19 or strengthening the response to infectious diseases in general including COVID-19 (the “COVID-19 Emergency Window”). Eligible projects and investments included overseas mergers and acquisitions, natural resources finance, restructuring of global value chains and projects and investments that contributed to the reduction of greenhouse gas emissions or protection of the environment. The COVID-19 Emergency Window expired on December 31, 2021.

Japan

GENERAL

Area and Population

Japan has a total population of approximately 125 million (estimated as of April 1, 2022). It has one of the highest population densities in the world and approximately 24.2% of its people (estimated as of October 1, 2021) are concentrated in three metropolitan areas (Tokyo, Osaka and Nagoya). Japan’s rate of population decrease during the years 2017-2021 was 1.1%. Japan’s population decreased by 0.5% during the 12 months ended October 1, 2021.

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 14, 2021 and an election was held on October 31, 2021. 289 members were elected from single-member districts and 176 members were elected through a proportional representation process from 11 regional districts. Pursuant to a revision of the Public Offices Election Act in July 2018, the number of seats in the House of Councillors was increased to 248 from 242. The members are elected for six-year terms with one-half of the membership being elected every three years. In an election in July 2019, 124 members were elected, of which 50 members were elected through a proportional representation system and 74 members were elected from 45 districts that correspond to the 47 prefectures of Japan. Currently, the House of Councillors consists of 121 members whose term expire in July 2022 and 124 members whose term expire in July 2025.

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The following tables set forth the membership by political party of the House of Representatives as of April 28, 2022 and the House of Councillors as of May 16, 2022.


	House of Representatives
Liberal Democratic Party		263
The Constitutional Democratic Party of Japan and the Independent		97
Nippon Ishin (Japan Innovation Party)		41
Komeito		32
Democratic Party For the People		11
Japanese Communist Party		10
Yushi no kai		5
REIWA SHINSENGUMI		3
Independents		3
Vacancies		0

Total		465

Source: House of Representatives.


	House of Councillors
Liberal Democratic Party and Voice of The People		110
The Constitutional Democratic Party of Japan and Social Democratic Party		45
Komeito		28
Democratic Party For the People and The Shin-Ryokufukai		16
Nippon Ishin (Japan Innovation Party)		15
Japanese Communist Party		13
Okinawa Whirlwind		2
REIWA SHINSENGUMI		2
Hekisuikai		2
Your Party		2
Independents		8
Vacancies		2

Total		245

Source: House of Councillors.

Leadership

Japan’s current Prime Minister is KISHIDA Fumio, a member of the Liberal Democratic Party of Japan and member of the House of Representatives in the Diet. KISHIDA Fumio was elected as Japan’s 100th Prime Minister on October 4, 2021, succeeding the former Prime Minister SUGA Yoshihide.

International Trade Agreements

Japan signed an agreement to join the Trans Pacific Partnership (“TPP”) on February 4, 2016. Upon the ratification of the TPP, Japan and the other participating countries planned to not only eliminate tariffs on products but also liberalize services and investment, and establish rules in a wide range of fields, including intellectual property, e-commerce and the environment. Although Japan ratified the TPP on January 20, 2017, the United States announced its formal withdrawal from the TPP on January 23, 2017. On March 8, 2018, Japan and ten other countries excluding the United States signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, pursuant to which each signatory country agreed to start the necessary preparations for the implementation of the TPP. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership entered into force for Japan, Mexico, Singapore, New Zealand, Canada, and Australia on December 30, 2018, for Vietnam on January 14, 2019, and for Peru on September 19, 2021. On February 1, 2021, the United Kingdom formally applied to join the TPP. Japan intends to facilitate the process of commencing negotiations with the United Kingdom pursuant to the application procedures under the TPP and in cooperation with the other members.

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THE ECONOMY

General

Economic activity in Japan has been significantly restricted by the COVID-19 pandemic and the measures implemented to slow the spread of the disease. Due primarily to the impact of the COVID-19 pandemic, real GDP decreased by 4.5% during JFY 2020. In response to this pandemic, the Japanese government and the BOJ have announced a number of fiscal, monetary and economic measures aimed at mitigating the resulting economic impact. While the COVID-19 pandemic is expected to continue to have a significant negative impact on the Japanese economy, the duration and extent of the economic impact of COVID-19 remain highly uncertain.

In order to slow the spread of COVID-19, the Japanese central and local governments have implemented a number of measures, including the declaration of multiple states of emergency by the Prime Minister of Japan. In addition, the emergence of a new COVID-19 variant in late 2021 prompted the Japanese government to reimpose international travel restrictions including closure of international borders to almost all foreign nationals and resulted in the introduction of certain other preventative measures. These restrictions had, and may further have in the future, a severe impact on both business travel and inbound international tourism, an important and formerly growing sector of the Japanese economy. According to the Monthly Economic Report published by the Cabinet Office of Japan for April 2022, published on April 21, 2022, there are signs that economic activity is recovering as the impact of COVID-19 eases. Although many of the preventative measures such as restrictions on international travel have been recently relaxed, the number of infections continue to be high, and, the duration and extent of the economic impact of COVID-19 still remain highly uncertain. Accordingly, additional restrictive measures may be imposed in the future, including the declaration of a state of emergency for all or parts of Japan, based on certain factors such as an increase in infection rates.

In addition, the global economy has recently been impacted by Russia’s large-scale military activity against Ukraine that was initiated in February 2022 and the related economic sanctions imposed on certain Russian entities and persons by many major countries. In particular, financial and commodity markets have experienced significant volatility and energy prices have sharply increased mainly due to concerns regarding disruptions in oil and natural gas supply. Depending on how the conflict develops and any additional economic sanctions imposed on Russia, economic conditions in Japan and globally may be negatively impacted for an uncertain period of time.

Summary of Key Economic Indicators

The following tables set forth information regarding certain of Japan’s key economic indicators for the periods indicated:


	JFY 2016			JFY 2017			JFY 2018			JFY 2019			JFY 2020			JFY 2021

	(yen amounts in billions, except percentages and index)
Percentage Changes of GDP from Previous Year
At Nominal Prices		0.8	%		2.0	%		0.1	%		0.2	%		-3.9	%		—
At Real Prices^(a)		0.8			1.8			0.2			-0.7			-4.5			—
Total Revenues of Consolidated General and Special Accounts	¥	259,413		¥	244,729		¥	243,868		¥	251,292		¥	353,277			¥335,202
Total Expenditures of Consolidated General and Special Accounts		241,061			229,389			226,661			232,905			305,846			327,800
Surplus of Consolidated Revenues over Consolidated Expenditures		18,353			15,340			17,206			18,387			47,431			7,401
Public Debt		908,093			934,321			954,863			965,926			993,542			1,037,735

(a)	Real prices are based on calendar year 2015.

(b)	The data for JFY 2021 is the provisional results as of December 31, 2021.

Source: Economic and Social Research Institute; Cabinet Office; and Ministry of Finance.

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	JFY 2016			JFY 2017			JFY 2018			JFY 2019			JFY 2020			JFY 2021

	(yen amounts in billions, except percentages and index)
Unemployment Rate		3.1	%		2.8	%		2.4	%		2.4	%		2.8	%		2.8	%
Consumer Price Index^(a)		98.1			98.6			99.5			100.0			100.0			99.8
Annual Change		-0.1	%		0.5	%		1.0	%		0.5	%		0.0	%		-0.2	%
Corporate Goods Price Index^(b)		96.5			98.7			101.3			101.5			100.3			105.1
Annual Change		-3.5	%		2.3	%		2.6	%		0.2	%		-1.2	%		4.8	%
Current Account regarding Balance of Payments	¥	21,391		¥	22,778		¥	19,505		¥	19,211		¥	15,879		¥	15,488
Official Foreign Exchange Reserves	$	1,217		$	1,264		$	1,271		$	1,324		$	1,395		$	1,406

(a)	Calendar year 2020=100.

(b)	Calendar year 2015=100. Indices are calculated using the monthly averages.

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”; Consumer Price Index, Statistics Bureau, Ministry of Internal Affairs and Communications; Domestic Corporate Goods Price Index, Bank of Japan; and Ministry of Finance.

Gross Domestic Product and National Income

In December 2016, the methodology of calculating Japan’s GDP was revised to implement the System of National Accounts 2008 (2008 SNA), the latest version of the international statistics standard for the national accounts adopted by the United Nations Statistical Commission, as well as other changes. In December 2020, the methodology of calculating Japan’s GDP was further revised to change the benchmark year for real prices from 2011 to 2015. Revised GDP figures based on this methodology were published for prior years starting from JFY 1994. The GDP figures set forth in the tables below reflect this revised methodology.

The following table sets forth information pertaining to Japan’s gross domestic product for JFY 2016 through JFY 2020. Nominal GDP decreased by 3.9% during JFY 2020, and the annual growth rate of real GDP was -4.5%. While the duration and extent of the economic impact of COVID-19 remain highly uncertain, it is likely that the continued spread of COVID-19 will have a significant negative impact on the Japanese economy, including with respect to nominal and real GDP.

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Gross Domestic Product^(a)


	JFY 2016			JFY 2017			JFY 2018			JFY 2019			JFY 2020			Percentage of JFY 2020 GDP

	(yen amounts in billions)
Total Consumption
Private sectors	¥	298,334		¥	303,008		¥	304,861		¥	303,609		¥	286,978			53.6	%
Public sectors		106,798			107,707			109,093			111,837			113,706			21.2

		405,132			410,715			413,953			415,446			400,684			74.8
Total Gross Capital Formation
Private sectors
Producers’ Durable Equipment		87,001			90,183			92,032			91,789			84,496			15.8
Residential Construction		21,251			21,255			20,528			21,397			19,832			3.7
Public sectors		27,085			27,687			28,391			29,300			30,911			5.8

		135,337			139,125			140,951			142,486			135,238			25.3
Additions to Business Inventories
Private sectors		210			1,748			2,220			1,316			70			0.0
Public sectors		(281	)		89			(71	)		(5	)		(27	)		(0.0	)

		(71	)		1,838			2,149			1,311			42			0.0
Net Exports of Goods and Services		4,430			4,044			(749	)		(1,938	)		(419	)		(0.1	)

Nominal Gross Domestic Expenditures	¥	544,827		¥	555,722		¥	556,304		¥	557,305		¥	535,546			100.0	%

Real Gross Domestic Expenditures^(b)	¥	543,463		¥	553,215		¥	554,260		¥	550,625		¥	525,767

Surplus of the Nation on Current Account
Exports of Goods and Services and Other Receipts from Abroad		29,191			31,346			33,880			34,261			29,325
Less: Imports of Goods and Services and Other Payments Abroad		10,037			11,026			12,155			12,493			10,168

		19,154			20,320			21,726			21,768			19,157

Gross National Income	¥	563,981		¥	576,042		¥	578,030		¥	579,073		¥	554,703
Percentage Changes of GDP from Previous Year
At Nominal Prices		0.8	%		2.0	%		0.1	%		0.2	%		(3.9	)%
At Real Prices^(b)		0.8			1.8			0.2			(0.7	)		(4.5	)
Deflator^(c)		0.0			0.2			(0.1	)		0.8			0.6

(a)	GDP financial data are subject to change.

(b)	Real prices are based on calendar year 2015.

(c)	Deflator is a price index used to convert nominal prices into real prices. Deflator is derived by dividing nominal GDP by real GDP.

Source: Economic and Social Research Institute, Cabinet Office

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The following table sets forth information pertaining to Japan’s gross domestic product, as seasonally adjusted, for each of the eight quarters ended December 31, 2021.


	Quarterly Gross Domestic Product^(a)
	2020												2021
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter			Fourth Quarter

	(yen amounts in billions)
Nominal Gross Domestic Expenditures^(b)	¥	553,878		¥	512,525		¥	538,980		¥	546,105		¥	543,565		¥	544,693		¥	538,923		¥	540,745

Real Gross Domestic Expenditures^(b)(c)	¥	544,666		¥	501,370		¥	527,957		¥	537,792		¥	534,868		¥	537,992		¥	534,176		¥	540,211

Percentage Changes of GDP from the Previous Quarter At Nominal Prices^(d)		0.7	%		(7.5	)%		5.2	%		1.3	%		(0.5	)%		0.2	%		(1.1	)%		0.3	%
At Real Prices^(c)(d)		0.4			(7.9	)		5.3			1.9			(0.5	)		0.6			(0.7	)		1.1
Deflator^(e)		0.3			0.5			(0.1	)		(0.5	)		0.1			(0.4	)		(0.4	)		(0.8	)

(a)	Quarterly GDP financial data are subject to change.

(b)	Numbers are based on seasonally-adjusted GDP figures.

(c)	Real prices are based on calendar year 2015.

(d)	Percentage changes are based on seasonally-adjusted GDP figures.

(e)	Deflator is a price index used to convert nominal prices into real prices. Deflator is derived by dividing nominal GDP by real GDP.

Source: Economic and Social Research Institute, Cabinet Office.

Per Capita Gross Domestic Product

The following table indicates per capita gross domestic product for calendar year 2016 through calendar year 2020.


	Per Capita GDP
JFY	Amount (in thousands of yen)		Year-on-year change (%)
2016	¥	4,293		0.9
2017		4,386		2.2
2018		4,400		0.3
2019		4,418		0.4
2020		4,259		-3.6

National Income

The following table sets forth national income for calendar year 2016 through calendar year 2020.


	National Income
	2016			2017			2018			2019			2020

	(yen amounts in billions)
Domestic Factor Income		374,254			380,613			380,856			377,886			356,955
Net Income from Abroad		18,943			20,461			21,289			21,816			19,516

National Income at Factor Cost		393,197			401,074			402,145			399,702			376,471

Percentage Changes of Income at Factor Cost from Previous Year		1.0	%		2.0	%		0.3	%		-0.6	%		-5.8	%

Source: Economic and Social Research Institute, Cabinet Office.

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Industry

The following table sets forth the proportion of gross domestic product contributed by major industrial sectors of the economy for calendar year 2016 through calendar year 2020.

GDP by Industrial Sectors (at nominal prices)


	2016			2017			2018			2019			2020
Industry
Agriculture, forestry and fishing		1.1	%		1.1	%		1.0	%		1.0	%		1.0	%
Mining		0.1			0.1			0.1			0.1			0.1
Manufacturing		20.3			20.4			20.6			20.1			19.7
Electricity, gas and water supply and waste management service		2.9			2.9			2.9			3.0			3.3
Construction		5.4			5.4			5.4			5.5			5.9
Wholesale and retail trade		12.9			13.0			12.7			12.4			12.6
Transport and postal services		5.2			5.3			5.3			5.3			4.3
Accommodation and food service activities		2.6			2.6			2.6			2.5			1.8
Information and communications		5.0			4.8			4.9			4.8			5.1
Finance and insurance		4.1			4.0			4.1			4.0			4.3
Real estate		11.9			11.8			11.7			11.8			12.2
Professional, scientific and technical activities		8.0			8.0			8.1			8.3			8.4
Public administration		4.9			4.9			4.9			5.0			5.2
Education		3.5			3.4			3.4			3.4			3.6
Human health and social work activities		7.7			7.6			7.7			7.8			8.2
Other service activities		4.1			4.1			4.0			4.0			3.7

Total		99.6	%		99.5	%		99.5	%		99.1	%		99.5	%

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 2016 through JFY 2020.


	Sources of Primary Energy Supplied^(a)
JFY	Total Primary Energy Supplied (peta-joules)		Oil			Coal			Nuclear			Natural Gas			Other
2016		19,858		39.7	%		25.4	%		0.8	%		23.8	%		10.3	%
2017		20,098		39.0			25.1			1.4			23.4			11.1
2018^(b)		19,720		37.6			25.1			2.8			22.9			11.7
2019^(b)		19,136		37.1			25.3			2.8			22.4			12.4
2020^(b)		17,965		36.4			24.6			1.8			23.8			13.4

(a)	Figures represent the proportion of each source as a share of the domestic primary energy supplied. Domestic primary energy supplied is total primary energy supplied less exports and inventory adjustments.

(b)	Standard heating value by energy source, which is used to create total primary energy supplied statistics, is revised every five years. Figures for 2018 through 2020 represent the revised standard heating value by energy source.

Source: Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry, Report on Energy Supply and Demand.

Since JFY 2011, largely due to the effects of the Earthquake, the import of oil and natural gas as alternatives to nuclear energy increased significantly as the demand increased for power generation at thermal power stations.

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The table below sets forth information regarding crude oil imports for JFY 2017 through JFY 2021.


	JFY 2017		JFY 2018		JFY 2019		JFY 2020		JFY 2021
Volume of imports (thousand kilo-liters per day)		501		475		471		385		403
Cost of imports (c.i.f. in billions of yen)	¥	7,283	¥	8,721	¥	7,980	¥	4,057	¥	8,016
Average price (c.i.f. in yen kilo-liters)	¥	39,828	¥	50,274	¥	46,389	¥	28,870	¥	54,511

Source: Customs and Tariff Bureau, Ministry of Finance.

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. Oil price has fluctuated significantly in recent years, reaching approximately ¥75,000 yen per kilo-liter in January 2014, then dropping below ¥37,000 yen per kilo-liter in February 2015, and increasing again to approximately ¥50,000 yen per kilo-liter in June 2015. In the first quarter of 2016, oil price dropped below ¥30,000 yen per kilo-liter due to oversupply and uncertainties regarding the Chinese economy. After the first quarter, oil price began increasing due to the mild recovery of the world economy and the OPEC agreement to reduce production. Although the oil price significantly declined soon after the outbreak of COVID-19 in 2020, below ¥20,000 yen per kilo-liter in May 2020, it has steadily increased since then as the world economy has gradually recovered from the impact of COVID-19. Recently, the oil price has increased sharply to ¥66,886 yen per kilo-liter in March 2022 in part due to the political instability in Russia and Ukraine and resulting disruption in oil supply.

The following table sets forth information relating to total electric power generating capacity and electric power generation for JFY 2016 through JFY 2020.


	JFY 2016		JFY 2017		JFY 2018		JFY 2019		JFY 2020

	(megawatts)
Electric power generating capacity^(a):
Fossil Fuel		194,669		193,462		193,026		189,784		191,758
Hydro-electric		50,117		50,014		50,037		50,033		50,033
Nuclear		41,482		39,132		38,042		33,083		3,308
Other		13,092		16,600		18,988		20,997		23,677

Total		299,362		299,209		300,093		293,897		298,550


	(gigawatt-hours)
Electric power generation:
Fossil Fuel		877,016		861,435		823,589		792,810		789,725
Nuclear		17,300		31,278		62,109		61,035		37,011
Hydro-electric		84,570		90,128		87,398		86,314		86,310
Other		19,024		24,500		27,311		30,611		35,637

Total		997,911		1,007,341		1,000,409		970,771		948,979

(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.

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Price Indices

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


	Corporate Goods Price Index^(a)				Consumer Price Index^(b)
	Index^(c)		Annual % Change		Index		Annual % Change
2017		98.7		2.3		98.6		0.5
2018		101.3		2.6		99.5		1.0
2019		101.5		0.2		100.0		0.5
2020		100.3		-1.2		100.0		0.0
2021		105.1		4.8		99.8		-0.2

(a)	All commodities. Calendar year 2015=100. Source: Domestic Corporate Goods Price Index, Bank of Japan.

(b)	General index. Calendar year 2020=100. Source: Consumer Price Index, Statistics Bureau, Ministry of Internal Affairs and Communications.

(c)	Indices are calculated using the monthly averages.

Labor

The number of employees increased from 2004 to 2007 and decreased from 2008 to 2012. After recovering in 2013, the number of employees increased from 2014 to 2019, followed by a decrease in 2020, the first in eight years. In 2020, the average employment was estimated at 67.1 million, of which 23.1% were employed in mining, manufacturing and construction, 3.2% were employed in agriculture, forestry and fisheries, and 73.8% in services and other sectors. In 2021, the average employment was estimated at 67.1 million, of which 22.8% were employed in mining, manufacturing and construction, 3.1% were employed in agriculture, forestry and fisheries, and 74.1% in services and other sectors. The unemployment rate (seasonally adjusted) in Japan gradually increased from 2008 to the middle of 2009, but has gradually decreased since the end of 2009. In 2020, the unemployment rate increased for the first time in eleven years. The unemployment rate ranged between 2.7% and 3.0% during 2021. The seasonally adjusted unemployment rate was 2.8% for November and 2.7% for December in 2021 and 2.8% for January, 2.7% for February and 2.6% for March in 2022, the most recent five months for which statistics are available. As a result of the COVID-19 pandemic and the resulting wide-scale disruption of business activities, employment conditions in Japan have been negatively affected. However, the duration and extent of the impact on employment in Japan remain highly uncertain. (Note: Due to the impact of the Great East Japan Earthquake, it has become difficult to conduct a labor search in the following prefectures: Iwate, Miyagi and Fukushima. For this reason, the nationwide unemployment rate for the period between March 2011 and August 2011 does not account for these three prefectures.)

The following table indicates unemployment statistics for Japan for each of the last five years:


Calendar Year	Unemployment Rate (%)
2017		2.8
2018		2.4
2019		2.4
2020		2.8
2021		2.8

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

S-23

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


	Wage Index^(a)				Industrial Production Index^(b)
	Index^(c)		Annual % Change		Index		Annual % Change
2017		101.1		0.4		103.1		3.1
2018		101.6		1.4		104.2		1.1
2019		101.2		-0.4		101.1		-3.0
2020		100.0		-1.2		90.6		-10.4
2021		100.3		0.3		95.7		5.6

(a)	Calendar year 2015=100. Source: Monthly Labor Survey, Ministry of Health, Labor and Welfare.

(b)	Calendar year 2015=100. Source: Ministry of Economy, Trade and Industry.

(c)	Indices are calculated using the monthly averages.

The following table shows selected employment information by industry.


	2017			2018			2019			2020			2021

	(all figures in percentages, except as indicated)
Employed persons (in thousands of persons)		65,420			66,820			67,500			67,100			67,130
Employment by Industry:
Agriculture, forestry and fisheries		3.38	%		3.41	%		3.29	%		3.17	%		3.10	%
Mining, manufacturing and construction		23.78			23.53			23.26			23.06			22.84
Services and other sectors		72.84			73.06			73.45			73.77			74.07

Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

The following table shows employment rate by age and gender.


	2017			2018			2019			2020			2021

	(all figures in percentages)
Total		58.8	%		60.0	%		60.6	%		60.3	%		60.4	%
Employment rate by age:
15 – 64 years old		75.3			76.8			77.7			77.3			77.7
15 – 24 years old		42.5			45.9			47.5			46.4			46.6
25 – 34 years old		83.6			84.8			85.3			85.1			86.0
35 – 44 years old		83.6			85.0			85.6			85.0			85.4
45 – 54 years old		85.1			85.7			86.4			86.0			86.0
55 – 64 years old		73.4			75.2			76.3			76.7			77.0
55 – 59 years old		81.0			81.7			82.3			82.2			82.1
60 – 64 years old		66.2			68.8			70.3			71.0			71.5
65 and over		23.0			24.3			24.9			25.1			25.1
65 – 69 years old		44.3			46.6			48.4			49.6			50.3
70 – 74 years old		27.2			30.2			32.2			32.5			32.6
75 and over		9.0			9.8			10.3			10.4			10.5
25 – 44 years old		83.6			84.9			85.5			85.0			85.7
Employment rate by gender:
Male		68.4			69.3			69.7			69.3			69.1
Female		49.8			51.3			52.2			51.8			52.2

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

S-24

The following table shows employment data by type of employment.


	2017		2018		2019		2020		2021

	(in thousands of persons)
Employee (except for executive of company or corporation)		54,690		56,050		56,690		56,290		56,290
Regular employee		34,320		34,850		35,030		35,390		35,650
Non-regular employee		20,360		21,200		21,650		20,900		20,640

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

Aging Workforce and Population Decrease

The following table indicates the age distribution of Japan’s population:

Population and Percentage distribution by Age (5-Year Age Group)


	Both sex
Age groups	2017		2018		2019		2020		2021

	Population (in thousands of persons)
Total		126,706		126,443		126,167		126,146		125,502
0 – 4 years old		4,909		4,838		4,758		4,541		4,389
5 – 9		5,251		5,184		5,101		5,114		5,038
10 – 14		5,432		5,392		5,351		5,376		5,357
15 – 19		5,995		5,907		5,820		5,706		5,580
20 – 24		6,228		6,330		6,388		6,320		6,263
25 – 29		6,291		6,223		6,240		6,384		6,379
30 – 34		7,112		6,936		6,752		6,714		6,556
35 – 39		7,884		7,694		7,551		7,498		7,354
40 – 44		9,443		9,093		8,718		8,476		8,173
45 – 49		9,457		9,666		9,802		9,868		9,732
50 – 54		8,156		8,360		8,567		8,738		9,252
55 – 59		7,592		7,651		7,711		7,940		7,824
60 – 64		7,804		7,591		7,523		7,442		7,391
65 – 69		9,921		9,368		8,709		8,236		7,869
70 – 74		7,749		8,234		8,686		9,189		9,672
75 – 79		6,738		6,932		7,241		7,065		6,712
80 – 84		5,293		5,347		5,328		5,404		5,563
85 – 89		3,396		3,514		3,612		3,742		3,872
90 – 94		1,582		1,674		1,761		1,811		1,904
95 – 99		405		439		479		500		537
100 and over		67		69		69		80		85
Regrouped
0 – 14 years old		15,592		15,415		15,210		15,032		14,784
15 – 64		75,962		75,451		75,072		75,088		74,504
65 and over		35,152		35,578		35,885		36,027		36,214
65 – 74 years old		17,670		17,603		17,395		17,425		17,540
75 and over		17,482		17,975		18,490		18,602		18,674

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	Both sex
Age groups	2017		2018		2019		2020		2021

	Percentage Distribution (%)
Total		100.00		100.00		100.00		100.00		100.00
0 – 4 years old		3.87		3.83		3.77		3.60		3.50
5 – 9		4.14		4.10		4.04		4.05		4.01
10 – 14		4.29		4.26		4.24		4.26		4.27
15 – 19		4.73		4.67		4.61		4.52		4.45
20 – 24		4.92		5.01		5.06		5.01		4.99
25 – 29		4.97		4.92		4.95		5.06		5.08
30 – 34		5.61		5.49		5.35		5.32		5.22
35 – 39		6.22		6.08		5.98		5.94		5.86
40 – 44		7.45		7.19		6.91		6.72		6.51
45 – 49		7.46		7.64		7.77		7.82		7.75
50 – 54		6.44		6.61		6.79		6.93		7.37
55 – 59		5.99		6.05		6.11		6.29		6.23
60 – 64		6.16		6.00		5.96		5.90		5.89
65 – 69		7.83		7.41		6.90		6.53		6.27
70 – 74		6.12		6.51		6.88		7.28		7.71
75 – 79		5.32		5.48		5.74		5.60		5.35
80 – 84		4.18		4.23		4.22		4.28		4.43
85 – 89		2.68		2.78		2.86		2.97		3.09
90 – 94		1.25		1.32		1.40		1.44		1.52
95 – 99		0.32		0.35		0.38		0.40		0.43
100 and over		0.05		0.05		0.05		0.06		0.07
Regrouped
0 – 14 years old		12.31		12.19		12.29		11.92		11.78
15 – 64		59.95		59.67		59.50		59.52		59.36
65 and over		27.74		28.14		28.44		28.56		28.86
65 – 74 years old		13.95		13.92		13.79		13.81		13.98
75 and over		13.80		14.22		14.66		14.75		14.88

If the population of Japan continues to decrease, it may have a material adverse impact on Japan’s overall socioeconomics in the future, including with respect to economic scale, standard of living and sustainability of the social security system.

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FOREIGN TRADE AND BALANCE OF PAYMENTS

Foreign Trade

Japan is one of the leading trading nations of the world, ranking fifth to China, the United States, Germany and the Netherlands in merchandise exports and ranking fourth to the United States, China and Germany in merchandise imports among the IMF member countries in 2021.

In 2020, Japan had a trade surplus of ¥388 billion due to decrease in imports of mineral fuels because of the deterioration of resources and material market. Exports from Japan were negatively impacted in the first half of 2020 due to a decline in external demand caused by the COVID-19 pandemic, but showed signs of recovery after the latter half of the year. In 2021, Japan had a trade deficit of ¥1,669 billion due to an increase in imports including crude oil and non-ferrous metals, which was partially offset by an increase in exports including steel and automobile parts. However, the impact of the global COVID-19 pandemic and potential international trade disruptions resulting from the conflict between Russia and Ukraine on exports, imports and the overall trade balance is highly uncertain.

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 Index^(a)				Terms of Trade^(b)
	Exports		Imports		Exports		Imports		Exports		Imports		Index
2017		103.5		96.1		105.9		102.9		97.8		93.4		104.7
2018		107.8		105.5		107.7		105.8		100.1		99.7		100.4
2019		101.7		100.2		103.0		104.6		98.8		95.9		103.0
2020		90.5		86.7		91.0		97.9		99.4		88.6		112.2
2021		109.9		108.1		102.1		102.8		107.7		105.1		102.5

(a)	Calendar year 2015=100.

(b)	Unit value index of exports divided by unit value index of imports, multiplied by 100.

Source:

Japan Tariff Association, Ministry of Finance.

S-27

Composition of Japan’s Exports and Imports


	2017				2018				2019				2020				2021

	(yen amounts in billions)
JAPAN’S EXPORTS
Textile Products	¥	886	1.1	%	¥	901	1.1	%	¥	886	1.2	%	¥	754	1.1	%	¥	862	1.0	%
Metals and Metal Products		5,907	7.5			6,257	7.7			5,659	7.4			5,204	7.6			7,139	8.6
Machinery and Equipment:
Ships		1,322	1.7			1,368	1.7			1,493	1.9			1,142	1.7			1,050	1.3
Motor Vehicles		11,825	15.1			12,307	15.1			11,971	15.6			9,580	14.0			10,722	12.9
TV and Radio Receivers		107	0.1			117	0.1			116	0.2			89	0.1			96	0.1
Motorcycles		320	0.4			337	0.4			267	0.3			225	0.3			307	0.4
Scientific and Optical Instruments		2,416	3.1			2,314	2.8			2,130	2.8			1,968	2.9			2,322	2.8
Other^(a)		34,143	43.6			35,501	43.6			32,700	42.5			29,532	43.2			35,803	43.1

Total Machinery and Equipment		50,133	64.0			51,944	63.8			48,678	63.3			42,536	62.2			50,300	60.5
Chemicals		8,192	10.5			8,922	10.9			8,739	11.4			8,534	12.5			10,554	12.7
Foods and Beverages		645	0.8			741	0.9			754	1.0			790	1.2			992	1.2
Other Exports^(b)		12,524	16.0			12,714	15.6			12,216	15.9			10,581	15.5			13,244	15.9

Grand Total	¥	78,286	100.0	%	¥	81,479	100.0	%	¥	76,932	100.0	%	¥	68,399	100.0	%	¥	83,091	100.0	%

JAPAN’S IMPORTS
Foods and Beverages	¥	7,018	9.3	%	¥	7,247	8.8	%	¥	7,192	9.1	%		6,679	9.8	%		7,380	8.7	%
Raw Materials		4,725	6.3			4,992	6.0			4,861	6.2			4,682	6.9			6,932	8.2
Chemicals		7,567	10.0			8,550	10.3			8,163	10.4			7,859	11.6			9,732	11.5
Mineral Fuels:
Petroleum		7,155	9.5			8,906	10.8			7,969	10.1			4,646	6.8			6,929	8.2
Coal		2,570	3.4			2,812	3.4			2,528	3.2			1,708	2.5			2,762	3.3
Other^(c)		6,115	8.1			7,576	9.2			6,453	8.2			4,900	7.2			7,279	8.6

Total Mineral Fuel		15,840	21.0			19,294	23.3			16,951	21.6			11,254	16.5			16,969	20.0
Machinery and Equipment		24,490	32.5			25,952	31.4			25,319	32.2			22,973	33.8			26,765	31.6
Other Imports^(d)		15,740	20.9			16,669	20.2			16,114	20.5			14,564	21.4			16,982	20.0

Grand Total	¥	75,379	100.0	%	¥	82,703	100.0	%	¥	78,600	100.0	%	¥	68,011	100.0	%	¥	84,761	100.0	%

(a)	This category includes general machinery, electronic components including semiconductors and electronic equipment including electronic circuit.

(b)	This category includes raw materials, mineral fuels and vehicle parts.

(c)	This category includes liquid natural gas and petroleum products.

(d)	This category includes clothing and accessories thereof, non-ferrous metal and scientific and optical instruments.

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

S-28

Geographic Distribution of Japan’s Exports and Imports


	2017				2018				2019				2020				2021

	(yen amounts in billions)
JAPAN’S EXPORTS
Asia	¥	42,920	54.8	%	¥	44,736	54.9	%	¥	41,327	53.7	%	¥	39,220	57.3	%	¥	48,158	58.0	%
China		14,890	19.0			15,898	19.5			14,682	19.1			15,082	22.1			17,984	21.6
(Asia NIES)		17,048	21.8			16,888	20.7			15,597	20.3			14,808	21.6			17,849	21.5
(ASEAN)		11,872	15.2			12,634	15.5			11,578	15.1			9,843	14.4			12,461	15.0
Oceania		2,301	2.9			2,402	2.9			2,053	2.7			1,688	2.5			2,194	2.6
Australia		1,796	2.3			1,886	2.3			1,580	2.1			1,295	1.9			1,675	2.0
North America		16,189	20.7			16,500	20.3			16,222	21.1			13,384	19.6			15,748	19.0
U.S.A		15,113	19.3			15,470	19.0			15,255	19.8			12,611	18.4			14,831	17.8
Canada		1,076	1.4			1,029	1.3			968	1.3			773	1.1			917	1.1
Central and South America		3,154	4.0			3,399	4.2			3,221	4.2			2,285	3.3			3,086	3.7
Western Europe		9,053	11.6			9,389	11.5			9,010	11.7			7,651	11.2			8,851	10.7
EU^(a)		8,657	11.1			9,209	11.3			8,955	11.6			6,460	9.4			7,668	9.2
Central and Eastern Europe, Russia etc		1,475	1.9			1,719	2.1			1,757	2.3			1,514	2.2			1,946	2.3
Russia		674	0.9			805	1.0			783	1.0			628	0.9			862	1.0
Middle East		2,350	3.0			2,434	3.0			2,356	3.1			1,809	2.6			2,052	2.5
Africa		843	1.1			900	1.1			984	1.3			848	1.2			1,055	1.3

Total	¥	78,286	100.0	%	¥	81,479	100.0	%	¥	76,932	100.0	%	¥	68,399	100.0	%	¥	83,091	100.0	%

JAPAN’S IMPORTS
Asia	¥	37,026	49.1	%	¥	39,218	47.4	%	¥	37,413	47.6	%	¥	34,678	51.0	%	¥	41,079	48.5	%
China		18,459	24.5			19,194	23.2			18,454	23.5			17,508	25.7			20,377	24.0
(Asia NIES)		7,162	9.5			7,859	9.5			7,231	9.2			6,706	9.9			8,295	9.8
(ASEAN)		11,545	15.3			12,399	15.0			11,757	15.0			10,678	15.7			12,469	14.7
Oceania		4,969	6.6			5,659	6.8			5,587	7.1			4,359	6.4			6,412	7.6
Australia		4,365	5.8			5,053	6.1			4,958	6.3			3,831	5.6			5,734	6.8
North America		9,325	12.4			10,318	12.5			9,935	12.6			8,631	12.7			10,410	12.3
U.S.A		8,090	10.7			9,015	10.9			8,640	11.0			7,454	11.0			8,903	10.5
Canada		1,226	1.6			1,295	1.6			1,286	1.6			1,169	1.7			1,499	1.8
Central and South America		3,156	4.2			3,226	3.9			3,169	4.0			2,998	4.4			3,673	4.3
Western Europe		9,421	12.5			10,370	12.5			10,394	13.2			9,021	13.3			10,819	12.8
EU		8,757	11.6			9,718	11.8			9,722	12.4			7,832	11.5			9,422	11.1
Central and Eastern Europe, Russia etc		2,308	3.1			2,546	3.1			2,333	3.0			1,843	2.7			2,367	2.8
Russia		1,551	2.1			1,723	2.1			1,561	2.0			1,145	1.7			1,549	1.8
Middle East		8,243	10.9			10,375	12.5			8,852	11.3			5,558	8.2			8,471	10.0
Africa		931	1.2			991	1.2			918	1.2			922	1.4			1,529	1.8

Grand Total	¥	75,379	100.0	%	¥	82,703	100.0	%	¥	78,600	100.0	%	¥	68,011	100.0	%	¥	84,761	100.0	%

(a)	Data after February 2020 does not include the United Kingdom, as the United Kingdom exited the European Union (EU) on January 31, 2020.

Source: Press Releases, Ministry of Finance.

Balance of Payments

In 2017, Current Account surplus continued and increased to ¥22,778 billion with trade surplus. In 2018, Current Account surplus decreased to ¥19,505 billion. In 2019, Current Account surplus decreased to ¥19,251 billion. In 2020, Current Account surplus decreased to ¥15,674 billion. In 2021, Current Account surplus decreased to ¥15,488 billion.

S-29

In October 2013, Ministry of Finance and the Bank of Japan announced that they will revise balance of payments statistics, to be based on IMF Balance of Payments Manual, 6th Edition, starting with transactions in January 2014. The information below reflects the updated statistics.

Balance of Payments of Japan


	2017		2018		2019		2020		2021

	(in billions)
Current Account	¥	22,778	¥	19,505	¥	19,251	¥	15,674	¥	15,488
Balance on Goods and Services		4,221		105		-932		-877		-2,562
Trade Balance		4,911		1,127		150		2,778		1,670
Exports (f.o.b.)		77,254		81,226		75,775		67,263		82,284
Imports (f.o.b.)		72,342		80,100		75,625		64,485		80,614
Services		-691		-1,021		-1,082		-3,655		-4,232
Primary Income^(a)		20,684		21,403		21,553		19,121		20,478
Secondary Income^(b)		-2,127		-2,003		-1,370		-2,570		-2,429
Capital Account		-280		-211		-413		-207		-420
Financial Account^(c)		18,811		20,136		24,862		13,807		10,753
Assets		-10,738		-3,279		-9,883		-15,575		-20,336
Liabilities		-29,549		-23,415		-34,745		-29,382		-31,089
Net Errors and Omissions		-3,687		842		6,024		-1,659		-4,315

(a)

Primary Income mainly shows balance of payments of interests and dividends from external financial credits and debts and includes such items as receipt and payment of dividends and interests between parent companies and their subsidiaries, receipt and payment of stock dividends and bond interests, and receipt and payment of interests related to loans, borrowings, and deposits.

(b)	Secondary Income shows balance of payments of provision of assets unaccompanied by consideration between residents and non-residents and includes such items as receipt and payment of financial support, donations, and gifts by the government or by the people.

(c)	Positive figures (+) show increases in net assets, negative figures (-) show decreases in net assets in “Financial Account”.

Source: Balance of Payments, Ministry of Finance.

Official Reserves Assets


As of December 31,	Gold^(a)		Foreign Currency Reserves		IMF Reserve Position		SDRs (Special Drawing Rights)		Other Reserve Assets		Total

	(in millions of dollars)
2017	$	31,897	$	1,202,071	$	10,582	$	19,195	$	538	$	1,264,283
2018		31,531		1,208,958		11,464		18,484		538		1,270,975
2019		37,469		1,255,322		11,202		19,176		581		1,323,750
2020		46,526		1,312,160		15,147		20,215		632		1,394,680
2021		49,505		1,278,925		10,643		62,330		4,347		1,405,750

(a)	The valuation of gold reflects marked-to-market values.

Source: International Reserves/Foreign Currency Liquidity, Ministry of Finance.

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Foreign Exchange Rates

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


	2017		2018		2019		2020		2021
Average (Central Rate)	¥	112.13	¥	110.40	¥	108.99	¥	106.73	¥	109.89
High		118.18		114.55		112.24		112.18		115.45
Low		107.59		104.64		104.46		101.60		102.60

Source: Status of Transactions on Tokyo Foreign Exchange Market, Bank of Japan.

Foreign Direct Investment

The following table sets forth information regarding annual foreign direct investment in Japan and annual foreign direct investment abroad for the periods indicated.

Foreign direct investment in Japan (by industry)^(a)


	2017		2018		2019		2020		2021

	(in billions of yen)
Manufacturing (total)^(b)	¥	1,016.6	¥	1,188.5	¥	612.9	¥	34.9	¥	1,356.8
Food		28.8		9.8		58.2		-27.2		-66.6
Textile		2.8		-4.2		2.7		4.0		6.2
Lumber and pulp		-0.1		0.4		2.3		1.0		8.8
Chemicals and pharmaceuticals		15.1		298.6		118.6		-222.7		1,471.3
Petroleum		19.3		1.3		-93.7		7.7		5.1
Rubber and leather		0.1		-0.8		—		-0.6		-0.8
Glass and ceramics		11.0		2.0		-17.3		24.3		-5.1
Iron, non-ferrous, and metals		-1.1		7.3		11.7		3.5		10.2
General machinery		172.9		25.7		-54.1		25.4		13.7
Electric machinery		419.5		529.5		339.3		32.5		235.0
Transportation equipment		362.4		180.3		244.0		199.2		-329.3
Precision machinery		-31.3		2.7		-14.1		-3.1		5.7
Non-manufacturing (total)^(c)		32.8		-88.4		883.6		1,060.0		1,348.8
Farming and forestry		1.4		3.7		0.5		0.3		0.4
Fishery and marine products		—		1.7		0.9		1.2		1.1
Mining		18.5		3.3		4.2		1.5		5.4
Construction		3.4		-29.6		20.4		-0.8		9.8
Transportation		86.1		5.6		22.9		25.6		48.7
Communications		-74.9		-384.4		-32.7		-44.5		424.6
Wholesale and retail		-599.6		-570.4		-683.3		-400.4		-240.3
Finance and insurance		171.1		702.1		1292.3		1,244.5		929.7
Real estate		47.8		78.9		32.7		-19.6		-76.8
Services		270.7		10.5		141.2		195.0		61.3

Total	¥	1,049.4	¥	1,100.1	¥	1,496.5	¥	1,094.8	¥	2,705.7

(a)

Starting with transactions recognized in January 2014, the Bank of Japan began using the Sixth Edition of “Balance of Payments and International Investment Position Manual” (BPM6) released by International Monetary Fund in 2008 to calculate the data provided in this table. With respect to transactions recognized before January 2014, the Bank of Japan used the Fifth Edition of “Balance of Payments Manual” (BPM5) released by International Monetary Fund in 1993 to calculate the data provided in this table.

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(b)	The total amounts for Manufacturing include other types of manufacturing not separately listed in the table and therefore are different from the sum of listed subcategories of manufacturing.

(c)	The total amounts for Non-manufacturing include other industries not separately listed in the table and therefore are different from the sum of listed subcategories of Non-manufacturing industries.

Source: Outward / Inward Direct Investment, breakdown by Region and Industry, Ministry of Finance.

Foreign direct investment in Japan (by region)^(a)


	2017		2018		2019		2020		2021

	(in billions of yen)
North America	¥	436.9	¥	642.1	¥	1,381.9	¥	813.2	¥	747.3
Asia		341.4		-6.6		553.7		497.9		1,899.6
Europe		-150.1		-125.4		-704.2		-130.4		-259.0
Other regions		421.2		590.0		265.1		-85.9		317.8

Total	¥	1,049.4	¥	1,100.1	¥	1,496.5	¥	1,094.8	¥	2,705.7

(a)

Source: Outward / Inward Direct Investment, breakdown by Region and Industry, Ministry of Finance.

Foreign direct investment abroad (by industry)^(a)


	2017		2018		2019		2020		2021

	(in billions of yen)
Manufacturing (total)^(b)	¥	6,209.9	¥	6,365.9	¥	11,324.1	¥	7,260.5	¥	4,192.2
Food		1,137.7		65.7		593.0		1,579.9		360.0
Textile		91.6		184.5		71.1		43.8		26.1
Lumber and pulp		44.8		171.9		138.7		288.5		50.8
Chemicals and pharmaceuticals		1,047.4		1,617.8		4,577.9		1,070.2		1,101.5
Petroleum		21.1		67.7		18.2		31.6		23.0
Rubber and leather		105.9		192.4		213.1		163.7		-46.3
Glass and ceramics		170.3		222.8		241.4		217.2		27.6
Iron, non-ferrous, and metals		415.8		414.1		415.4		160.1		137.5
General machinery		1,036.6		834.9		706.0		-171.9		601.0
Electric machinery		684.7		1,036.2		1,389.9		1,656.4		1,452.8
Transportation equipment		947.0		1,219.6		2,452.1		1,940.0		145.7
Precision machinery		325.0		128.7		306.6		148.2		140.2
Non-manufacturing (total)^(c)		12,251.3		9,643.5		14,053.5		5,093.6		11,917.8
Farming and forestry		-12.8		8.0		6.3		39.2		35.7
Fishery and marine products		5.7		7.4		3.7		2.8		-5.5
Mining		124.0		1,062.6		1,060.1		769.5		8.6
Construction		173.6		258.3		201.9		174.0		82.7
Transportation		133.3		242.4		238.6		208.2		137.5
Communications		2,636.5		4,179.4		639.7		-2,367.7		937.6
Wholesale and retail		3,194.1		1,508.7		6,340.0		1,136.4		3,517.3
Finance and insurance		3,691.8		2,826.4		4,038.6		3,721.0		5,858.8
Real estate		725.1		424.5		1,185.0		272.5		377.7
Services		1,013.8		-1,456.5		-211.2		522.3		274.3

Total	¥	18,461.2	¥	16,009.4	¥	25,377.5	¥	12,354.1	¥	16,110.0

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(a)

(b)	The total amounts for Manufacturing include other types of manufacturing not separately listed in the table and therefore are different from the sum of listed subcategories of manufacturing.

(c)	The total amounts for Non-manufacturing include other industries not separately listed in the table and therefore are different from the sum of listed subcategories of Non-manufacturing industries.

Source: Outward / Inward Direct Investment, breakdown by Region and Industry , Ministry of Finance.

Foreign direct investment abroad (by region)^(a)


	2017		2018		2019		2020		2021

	(in billions of yen)
North America	¥	5,244.5	¥	2,192.4	¥	5,519.2	¥	4,087.6	¥	6,609.0
Asia		4,480.9		5,570.2		5,575.0		3,882.0		5,052.9
Europe		6,275.8		5,157.9		11,630.0		884.8		4,180.8
Other regions		2,460.0		3,088.8		2,653.3		3,499.8		267.3

Total	¥	18,461.2	¥	16,009.4	¥	25,377.5	¥	12,354.1	¥	16,110.0

(a)

Source: Outward / Inward Direct Investment, breakdown by Region and Industry, Ministry of Finance.

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FINANCIAL SYSTEM

The Bank of Japan and Monetary Policy

Furthermore, on March 16, 2020, in response to the adverse impact of the global spread of COVID-19 on the Japanese economy, the BOJ announced its plan to further strengthen its monetary easing policy, including (1) ensuring ample supply of yen funding through active purchases of JGBs and the following measures as well as providing U.S. dollar liquidity, (2) the introduction of special operations to support companies under which the BOJ will extend zero-interest rate loans collateralized by corporate debt as well as increasing the upper limit for its purchases of commercial paper and corporate bonds by 2 trillion yen until the end of September 2020, resulting in an upper limit for its balance of outstanding commercial paper and corporate bonds of 3.2 trillion yen and 4.2 trillion yen, respectively and (3) an increase in the upper limit for its purchases of ETFs and J-REITs to 12 trillion yen and 180 billion yen, respectively. On April 27, 2020, given the increasingly severe situation due to impact of the spread of COVID-19, the BOJ decided to further enhance monetary easing through (1) an increase in purchases of commercial paper and corporate bonds, to be conducted through the end of September 2020, setting the maximum amount of additional purchase to 7.5 trillion yen for each asset, (2) strengthening the BOJ’s Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19), which were introduced and became effective in March 2020, and (3) further active purchases of JGBs and treasury discount bills. On June 18, 2021, the BOJ extended the duration of the Special Funds-Supplying Operations to Facilitate Financing in Response to COVID-19 and the duration of purchase of commercial paper and corporate bonds, with an upper limit on the amount outstanding of about 20 trillion yen in total, until the end of March, 2022. The BOJ referred to these measures as the Special Program to Support Financing in Response to the COVID-19. On December 17, 2021, the BOJ announced that it would further extend the duration of a part of the Special Program to Support Financing in Response to the COVID-19 until September 2022 but plans to gradually decrease the balance of commercial paper and corporate bonds to the pre-pandemic level (approximately two trillion yen and three trillion yen, respectively).

The following table sets forth the principal economic indicators relating to monetary policy from 2017 through 2021.


	Current Account Balances^(a)		Monetary Base				Money Stock				Loans and Bills Discounts Domestically Licensed Banks
			Total(a)		Annual % Change		Total^(a)		Annual % Change		Total^(a)		Annual % Change

	(yen amounts in billions)
2017		352,883		458,104		17.2		973,993		4.0		475,148		3.2
2018		382,178		491,499		7.3		1,002,456		2.9		488,331		2.8
2019		396,404		509,008		3.6		1,026,203		2.4		500,517		2.5
2020		438,051		555,229		9.0		1,092,630		6.5		524,164		4.7
2021		521,752		643,496		16.2		1,162,696		6.5		536,936		2.4

(a)	Average amounts outstanding.

Source: Bank of Japan Statistics, Bank of Japan.

Private Financial Institutions

According to the Financial Services Agency, as of December 17, 2021, the private banking system included 4 city banks, 13 trust banks, and 17 other banks, as well as 62 1st local banks as of May 1, 2021, 37 2nd local banks as of May 1, 2021 and the Saitama Resona Bank, which is categorized as neither a 1st nor 2nd local bank. In addition, 57 foreign banks had branches in Japan as of January 28, 2022.

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. Agricultural cooperatives, prefectural credit federations of such cooperatives and The Norinchukin Bank operate in the field of agricultural credit.

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GOVERNMENT FINANCE

Revenues, Expenditures and Budgets

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 basic areas of governmental activity.

•

Special Accounts. The accounts of the central government consist of the general account and special accounts. Special accounts can be set up to carry out specific projects, to manage specific funds, and for other purposes. Special accounts can be set up when the government (i) implements a specific program such as insurance and public works, (ii) possesses and manages special funds such as Fiscal Loan Program Funds and Foreign Exchange Funds, and (iii) uses a certain revenue to secure a special expenditure and thus needs to deal with such revenue and expenditure on a separate basis from the general revenue and expenditure such as Local Allocation and Local Transfer Tax and Government Bonds Consolidation Funds. As of September 2021, the government had 13 special accounts.

•

Government-Affiliated Agencies. The government-affiliated agencies are government-owned corporations which consist of three financial corporations.

The following tables set forth information with respect to the General Account, the Special Accounts and the Government Affiliated Agencies for JFY 2016 through JFY 2021, and the initial budget for JFY 2022.

Summary of Consolidated General and Special Accounts^(a)


	JFY 2016		JFY 2017		JFY 2018		JFY 2019		JFY 2020		JFY 2021 (Provisional results as of December 31, 2021)		JFY 2022 Initial Budget

	(in billions of yen)
REVENUES
Total Revenues, General Account	¥	102,774	¥	103,644	¥	105,697	¥	109,162	¥	184,579	¥	173,434	¥	107,596
Total Revenues, Special Accounts		410,161		386,487		381,177		386,552		417,561		468,531		470,533
Less: Inter-Account Transactions^(b)		253,522		245,402		243,007		244,423		248,863		306,764		306,597

Total Consolidated Revenues	¥	259,413	¥	244,729	¥	243,868	¥	251,292	¥	353,277	¥	335,202	¥	271,533

EXPENDITURES
Total Expenditures, General Account	¥	97,541	¥	98,116	¥	98,975	¥	101,366	¥	147,597	¥	172,584	¥	107,596
Total Expenditures, Special Accounts		395,361		374,150		368,936		374,170		404,519		460,056		467,282
Less: Inter-Account Transactions^(b)		251,842		242,877		241,249		242,631		246,270		304,840		305,170

Total Consolidated Expenditures	¥	241,061	¥	229,389	¥	226,661	¥	232,905	¥	305,846	¥	327,800	¥	269,708

Surplus of Consolidated Revenues over Consolidated Expenditures	¥	18,353	¥	15,340	¥	17,206	¥	18,387	¥	47,431	¥	7,401	¥	1,824

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(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.

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General Account


	JFY 2016		JFY 2017		JFY 2018		JFY 2019		JFY 2020		JFY 2021 Revised Budget^(a)		JFY 2022 Initial Budget

	(in billions of yen)
REVENUES
Tax and Stamp Revenues	¥	55,468	¥	58,787	¥	60,356	¥	58,442	¥	60,822	¥	63,880	¥	65,235
Carried-over Surplus		3,945		5,232		5,528		6,723		7,796		6,148		53
Government Bond Issues		38,035		33,555		34,395		36,582		108,554		65,655		36,926
Income from Operations		47		50		51		51		46		52		51
Gains from Deposition of Assets		384		278		268		226		293		245		252
Miscellaneous Receipts		4,895		5,741		5,098		7,139		7,068		6,619		5,080

Total Revenues	¥	102,774	¥	103,644	¥	105,697	¥	109,162	¥	184,579	¥	142,599	¥	107,596

EXPENDITURES
Local Allocation Tax Grants, etc	¥	15,339	¥	15,567	¥	16,026	¥	16,032	¥	16,256	¥	19,558	¥	15,883
National Debt Service		22,086		22,521		22,529		22,286		22,326		24,705		24,339
Social Security		32,208		32,521		32,569		33,501		42,998		46,950		36,274
Public Works		6,710		6,912		6,913		7,610		8,413		8,066		6,058
Education and Science		5,598		5,703		5,748		5,911		9,194		8,114		5,390
National Defense		5,150		5,274		5,475		5,627		5,505		6,089		5,369
Former Military Personnel Pensions		335		286		241		202		169		145		122
Economic Assistance		743		651		642		653		763		669		511
Food Supply		1,140		1,181		1,122		1,121		1,498		1,775		1,270
Energy		973		969		973		1,049		1,027		1,266		876
Promotion of SMEs		430		319		525		779		16,257		4,147		171
Miscellaneous		6,830		6,211		6,212		6,596		23,190		15,614		5,835
Contingency funds for measures against the COVID-19												5,000		5,000
Contingencies		—		—		—		—		—		500		500

Total Expenditures	¥	97,542	¥	98,116	¥	98,975	¥	101,366	¥	147,597	¥	142,599	¥	107,596

Surplus of Revenues over Expenditures	¥	5,232	¥	5,528	¥	6,723	¥	7,796	¥	36,981	¥	—	¥	—

(a)	As revised to reflect the first revised budget for JFY2021 approved by the Diet on December 20, 2021.

Source: Budget, Ministry of Finance.

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Special Accounts


	JFY 2016				JFY 2017				JFY 2018				JFY 2019				JFY 2020				JFY 2021 Revised Budget^(a)				JFY 2022 Initial Budget
	Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.

													(in billions of yen)
Fiscal Investment and Loan Program	¥	42,124	¥	41,166	¥	28,207	¥	27,409	¥	26,070	¥	25,175	¥	28,484	¥	27,873	¥	52,366	¥	51,967	¥	40,595	¥	40,545	¥	48,832	¥	48,594
Government Bonds Consolidation Fund		198,994		195,911		191,227		188,134		186,158		183,082		186,970		183,878		188,973		185,921		242,212		242,212		245,791		245,791
Foreign Exchange Fund		2,948		70		2,808		70		3,101		85		3,599		160		3,133		234		2,465		1,079		2,491		1,147
Local Allocation and Local Transfer Tax		53,577		52,590		52,517		51,780		52,483		51,596		51,985		51,488		51,978		50,829		55,890		55,695		51,419		49,955
Measure for Energy		9,608		9,082		10,191		9,742		10,613		10,158		10,887		10,377		11,155		10,618		14,431		14,431		13,776		13,776
Pensions		90,142		85,786		90,158		87,413		91,700		89,464		93,209		90,919		94,591		91,804		96,610		96,610		96,912		96,912
Stable Supply of Foodstuff		940		820		979		842		970		814		968		851		926		821		1,225		1,216		1,342		1,341
Debt Management of National Forest and Field Service		329		329		342		342		349		349		356		356		363		363		360		360		355		355
Trade Reinsurance^(b)		37		12		—		—		—		—		—		—		—		—		—		—		—		—
Automobile Safety		606		426		625		431		672		451		684		500		651		434		530		454		519		448
Labor Insurance		6,296		5,941		6,040		5,656		6,073		5,735		6,371		5,928		10,589		9,519		9,897		8,861		7,955		7,858
Reconstruction from the Great East Japan Earthquake		4,105		2,961		2,924		2,188		2,532		1,868		2,587		1,677		2,498		1,854		994		994		841		841
Others		456		267		469		143		456		158		452		164		338		153		291		264		300		264

Total Revenues and Expenditures^(c)	¥	410,162	¥	395,361	¥	386,487	¥	374,150	¥	381,177	¥	368,936	¥	386,552	¥	374,170	¥	417,561	¥	404,519	¥	465,500	¥	462,721	¥	470,533	¥	467,282

(a)	As revised to reflect the first revised budget for JFY2021 approved by the Diet on December 20, 2021.

(b)	The account was abolished effective JFY 2017.

(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.

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Government Affiliated Agencies


	JFY 2016				JFY 2017				JFY 2018				JFY 2019				JFY 2020				JFY 2021 Initial Budget				JFY 2022 Initial Budget
	Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.		Rev.		Exp.

	(in billions of yen)
Total	¥	1,065	¥	906	¥	1,130	¥	962	¥	1,231	¥	1,064	¥	1,265	¥	1,064	¥	1,096	¥	804	¥	2,678	¥	3,234	¥	2,005	¥	2,519

Source: Budget, Ministry of Finance.

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Tax Structure

The central government derives tax revenues (including stamp revenues) through taxes on income, consumption and property, etc. The taxes on income, consumption and property (including stamp revenues, etc.) account for 54.1%, 40.9% and 5.1%, respectively, of the total central government taxes and stamp revenues in the JFY 2022 initial national account budget.

Comprehensive Reform of Social Security and Tax. Japan’s fiscal conditions face challenges, with its tax revenues covering about 61% of its expenditures under the initial budget for JFY 2022, and with the ratio of long-term debt outstanding of central and local governments to gross domestic product having reached 218% at the end of JFY 2020. The ratio of long-term debt outstanding of central and local governments to gross domestic product is expected to be increased to 224% at the end of JFY 2021 and decreased to 220% at the end of JFY 2022. They may further increase in subsequent fiscal years due to the negative impact of COVID-19 on gross domestic product and additional government debt issued in connection with stimulus measures implemented in response to COVID-19. See also “Japan’s Public Debt” below. The Government of Japan seeks to tackle these fiscal challenges through the “comprehensive reform of social security and tax”, which was approved by the Diet in August 2012, and thereby maintain the market’s and the international community’s confidence in Japan and build the foundation for stable economic growth. In the reform, the government planned to set aside consumption tax revenues for social security payments, and, on the condition that the economic situation improves, gradually increase the consumption tax rate to 8% in April 2014 and to 10% in October 2015. In accordance with the plan, the consumption tax rate was increased to 8% in April 2014. However, the government decided to postpone the implementation date of the further consumption tax hike to 10% from October 1, 2015 to April 1, 2017, as a result of taking comprehensive account of the economic condition and other factors, and on June 1, 2016, the then-current Japan Prime Minister ABE Shinzo announced a plan to further postpone the consumption tax hike to 10% from April 1, 2017, to October 1, 2019. The consumption tax rate was increased to 10% on October 1, 2019.

Fiscal Investment and Loan Program

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

Under the FILP plan, funds are supplied to government-related entities such as public corporations, government affiliated agencies, special accounts and local governments. The total amount of the initial plan for JFY 2021 is ¥40,906 billion. The sources of funds for the initial plan in JFY 2021 are Fiscal Loan (¥38,303 billion), Industrial Investment (¥363 billion), Government-Guaranteed domestic bonds (¥1,065 billion) and Government-Guaranteed foreign bonds (¥1,134 billion) and Government-Guaranteed long-term borrowings in foreign currencies (¥42 billion). On November 26, 2021, the total amount of the FILP plan for JFY2021 was revised to ¥41,828 billion. The sources of funds for the revised plan in JFY 2021 are Fiscal Loan (¥39,223 billion), Industrial Investment (¥363 billion) and Government-Guaranteed debt (¥2,242 billion), which consists of the Government-Guaranteed domestic bonds, Government-Guaranteed foreign bonds and Government-Guaranteed long-term borrowings in foreign currencies. The total amount of the initial plan for JFY 2022 is ¥18,886 billion. The sources of funds for the initial plan in JFY 2022 are Fiscal Loan (¥16,449 billion), Industrial Investment (¥326 billion), Government-Guaranteed domestic bonds (¥653 billion) and Government-Guaranteed foreign bonds (¥1,418 billion) and Government-Guaranteed long-term borrowings in foreign currencies (¥40 billion).

The Fiscal Loan utilizes the Fiscal Loan Fund consisting of funds procured through the issuance of FILP bonds and reserves or surplus funds deposited from government special accounts to provide long-term, fixed and low-interest loans to such entities as special government accounts, local governments, government-affiliated agencies, incorporated administrative agencies, etc.

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The following table (the “FILP Classification Table by Purpose”) shows the uses of funds allocated under the initial plan for the periods indicated.

(Note) The FILP Classification Table by Purpose has been prepared and published to specify fields where FILP contributes to the national economy or livelihood. Classification of the table had been almost the same from JFY 1961 to JFY 2014. However, the classification became to be inappropriate for reflecting realities of recent FILP-target projects, it was revised in JFY 2015 by sorting out the classification or putting some classifications together.


Old classification	JFY 2011		JFY 2012		JFY 2013		JFY 2014

	(in billions of yen)
Housing	¥	578	¥	923	¥	929	¥	942
Living environment		2,725		2,713		2,805		2,306
Social welfare		550		743		703		920
Education		1,176		1,232		1,522		1,278
Small and medium enterprises		3,627		4,323		4,197		3,861
Agriculture, forestry and fisheries		345		373		407		476
National land conservation/disaster recovery		180		645		348		477
Road construction		2,248		2,813		2,939		2,270
Transportation/communications		408		384		519		629
Regional development		467		447		372		259
Industry/technology		625		2,015		2,005		1,448
Trade/economic cooperation		1,978		1,039		1,644		1,313

Total	¥	14,906	¥	17,648	¥	18,390	¥	16,180


New classification	JFY 2014		JFY 2015		JFY 2016		JFY 2017		JFY 2018		JFY 2019		JFY 2020		JFY 2021		JFY 2022
SMEs and micro enterprises	¥	3,750	¥	3,448	¥	3,182	¥	2,969	¥	2,912	¥	2,997	¥	2,903	¥	14,521	¥	3,567
Agriculture, forestry and fisheries		318		280		322		339		573		604		590		759		699
Education		1,134		1,038		1,055		932		943		930		898		4,859		5,671
Welfare/medical care		772		773		811		670		627		541		477		2,042		1,044
Environment		50		61		61		64		61		33		54		57		93
Industry/ innovation		834		939		864		822		919		1,019		1,166		1,213		1,009
Housing		849		742		621		541		461		546		521		792		815
Social capital		4,467		3,999		3,087		5,093		4,761		3,745		3,752		3,065		2,634
Overseas investment and loans		1,547		1,378		2,000		2,455		2,003		1,857		2,039		2,029		2,472
Others		2,460		1,964		1,477		1,243		1,204		849		821		11,568		884

Total	¥	16,180	¥	14,622	¥	13,481	¥	15,128	¥	14,463	¥	13,119	¥	13,220	¥	40,906	¥	18,886

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JAPAN’S PUBLIC DEBT

Outstanding government bonds are expected to reach ¥1,026 trillion at the end of JFY 2022. The amount of public bonds issued by the Japanese government as a percentage of its general account total revenues was 46.0% under the revised budget for JFY 2021 and 34.3% under the initial budget for JFY 2022. The amount of the government bond issuances in the JFY 2022 initial budget is ¥36,926 billion and is less than the JFY 2021 revised budget level of ¥65,655 billion.

Summary of Japan’s Public Debt


	Funded				Floating Internal
At the end of JFY	Internal		External		Floating Internal
	(in billions)		(in thousands)		(in billions)
2017		934,321		—		153,492
2018		954,863		—		148,491
2019		965,926		—		148,614
2020		993,542		—		222,921
2021		1,037,735		—		203,572

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SUMMARY FINANCIAL INFORMATION

JAPAN BANK FOR INTERNATIONAL COOPERATION

SUMMARY UNAUDITED JAPANESE GAAP FINANCIAL INFORMATION AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021

The tables below set forth the summary unaudited financial information of JBIC on a consolidated basis as of and for the six months ended September 30, 2021, prepared in accordance with Japanese GAAP.

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	September 30, 2021
	(In millions of yen)
Assets:
Cash and due from banks	¥	1,781,420
Securities		291,203
Loans and bills discounted		13,044,261
Other assets		274,736
Property, plant and equipment		28,952
Buildings		3,599
Land		24,311
Construction in progress		31
Other		1,008
Intangible assets		3,561
Software		3,561
Customers’ liabilities for acceptances and guarantees		1,767,866
Allowance for loan losses		(331,637	)

Total assets	¥	16,860,364

Liabilities:
Borrowed money	¥	6,585,009
Bonds payable		5,074,161
Other liabilities		347,203
Provision for bonuses		592
Provision for directors’ bonuses		10
Net defined benefit liability		6,198
Provision for directors’ retirement benefits		45
Acceptances and guarantees		1,767,866

Total liabilities	¥	13,781,088

Net Assets:
Capital stock	¥	1,963,800
Retained earnings		1,030,722

Total shareholders’ equity		2,994,522

Valuation difference on available-for-sale securities		3,813
Deferred gains or losses on hedges		79,175
Foreign currency translation adjustment		1,437

Total accumulated other comprehensive income (loss)		84,426

Non-controlling interests		327

Total net assets		3,079,276

Total liabilities and net assets	¥	16,860,364

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CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)


	September 30, 2021
	(In millions of yen)
Ordinary income	¥	151,769
Interest income		111,098
Interest on loans and discounts		84,364
Interest and dividends on securities		342
Interest on deposits with banks		1,143
Interest on interest rate swap		25,227
Other interest income		21
Fees and commissions		12,820
Other ordinary income		3,688
Other income		24,161
Reversal of allowance for doubtful receivables		8,203
Recoveries of written-off claims		2,395
Other		13,562
Ordinary expenses		80,656
Interest expense		65,503
Interest on borrowed money and rediscounts		9,732
Interest on bonds		55,727
Other interest expense		43
Fees and commissions payments		1,639
Other ordinary expenses		1,081
General and administrative expenses		9,900
Other expenses		2,531

Ordinary profit		71,113

Extraordinary income		0
Gain on disposal of noncurrent assets		0

Net income before income taxes		71,113

Income taxes-current		21

Total income taxes		21

Net income	¥	71,091

Loss attributable to non-controlling interests		24

Net income attributable to owners of parent	¥	71,067

Our ordinary income for the six months ended September 30, 2021 was ¥151,769 million. Interest income, which amounted to ¥111,098 million, accounted for most of this income.

Our ordinary expenses for the six months ended September 30, 2021 were ¥80,656 million. Interest expense, which amounted to ¥65,503 million, accounted for a significant majority of these expenses.

For the six months ended September 30, 2021, the JBIC Group recorded ordinary profit of ¥71,113 million and net income attributable to owners of parent of ¥71,067 million.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


	September 30, 2021
	(In millions of yen)
Net income	¥	71,091
Other comprehensive income (loss)		(10,444	)
Valuation difference on available-for-sale securities		1,724
Deferred gains or losses on hedges		(15,678	)
Foreign currency translation adjustment		1,419
Share of other comprehensive income (loss) of equity method investments		2,089

Comprehensive income (loss)	¥	60,647

(Comprehensive income (loss) attributable to)
Owners of parent		60,623
Non-controlling interests		24

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CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	September 30, 2021
	(In millions of yen)
Cash flows from operating activities
Net income before income taxes	¥	71,113
Depreciation and amortization		1,071
Losses (profits) of equity method investments		(1,692	)
Increase (decrease) in allowance for loan losses		(8,203	)
Increase (decrease) in provision for bonuses		6
Increase (decrease) in net defined benefit liability		(139	)
Increase (decrease) in provision for directors’ retirement benefits		(1	)
Interest income		(111,098	)
Interest expense		65,503
Loss (gain) related to securities		(9,235	)
Foreign exchange losses (gains)		(653	)
Loss (gain) on disposal of noncurrent assets		(0	)
Net decrease (increase) in loans and bills discounted		512,553
Net increase (decrease) in borrowed money		(66,311	)
Net decrease (increase) in deposit (excluding deposit paid to Bank of Japan)		(150,390	)
Increase (decrease) in straight bonds-issuance and redemption		107,964
Interest received		114,341
Interest paid		(63,485	)
Other		(39,330	)

Subtotal		422,009

Income taxes paid		(25	)

Net cash provided by (used in) operating activities