Press Conference by ASO Taro, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services
(Excerpt)
(Monday, April 27, 2020, 11:09 am to 11:28 am)
[Opening remarks:]
The Cabinet ministers today all endorsed the decision to submit to the Diet a fiscal 2020 supplementary budget and a Ministry of Finance-related government-sponsored bill on temporary special provisions of acts related to national tax in response to the impact of the COVID-19 (novel coronavirus) pandemic. The fiscal 2020 supplementary budget is to be submitted in order to implement“Emergency Economic Measures to cope with COVID-19” and the bill in order to incorporate special tax measures into economic policies, and we will be working hard to ensure that the budget and the bill are passed as soon as possible.
The fiscal 2020 supplementary budget submitted to the Diet today creates a financing facility that allows effectively interest-free and unsecured loans are also provided via private financial institutions. Private financial institutions are also being asked, presuming the supplemental budget passes, to provide funds promptly and suitably in keeping with this financing facility, to institute “financial institution one-stop procedures” when doing so to make things more convenient for companies, to actively offer bridge financing until financing becomes available under this facility or other benefits can be paid out, and to keep branches open as needed during the holiday period of May 2 to May 6 to provide companies with consultations. We are also asking government-affiliated financial institutions to keep branches open as needed to offer consultations to companies. We are planning to collaborate with the relevant ministries and agencies in taking all possible measures to support companies’ cash flow. Please check with an administrative official for further details.
[Questions and answers:]
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Q.
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The virtually interest-free unsecured loans you mentioned have a maximum period of five years, but small and medium-sized enterprises are calling for measures that go further, such as longer loan periods of 10 or 20 years and postponement of principal repayments as long as interest payments are being made. What are your thoughts on these calls?
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A.
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It’s not like we do not understand that companies are asking to start out with periods of 10 or 20 years and may eventually be calling for a permanent suspension of principal repayments but, to be honest, we must begin with a more tangible target in mind. I think having such a sense of urgency is part and parcel of running a company.
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Q.
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It has been suggested that, because a loan period of five years would mean the principal repayment deadline would be five years from now, companies will be hesitant to borrow money. What do you have to say in that regard?
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A.
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I think this would differ by company manager. There are many types of companies and these companies are run in a variety of ways, so things are not so simple, but I believe five years is a decent target. Loans could be made for three years or even one year, but if we start out by letting companies borrow for five years, a reasonable target date will be established. The parties lending out money, those who now wish to lend out money, are faced with the problem of few borrowers.
