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Ministry of Finance Announces Results for Temporary Borrowing for Special Account (May 13, 2025 Auction)
Tokyo, Japan – May 13, 2025, 04:00 JST – The Japanese Ministry of Finance (財務省) today announced the results of an auction for temporary borrowings conducted on May 13, 2025. This borrowing is specifically for the Special Account for Local Allocation Tax and Local Transfer Tax (交付税及び譲与税配付金特別会計).
The official results were published on the Ministry of Finance’s website at 4:00 AM Japan Standard Time.
What is this announcement about?
Governments, just like households or businesses, need to manage their cash flow. Sometimes, expenditures are due before the necessary revenue has been fully collected. To bridge such temporary gaps, the government uses temporary borrowings (一時借入金). These are short-term funds raised for specific, immediate cash needs.
This particular auction is for a borrowing required by a special account. Special accounts are established for specific purposes and are separate from the general account of the national budget.
Understanding the Special Account for Local Allocation Tax and Local Transfer Tax
This specific special account plays a crucial role in Japan’s fiscal system. It handles:
- Local Allocation Tax (地方交付税): A system where a portion of national tax revenues (like income tax, consumption tax, etc.) is distributed to local governments (prefectures and municipalities). This is done to reduce financial disparities between wealthier and poorer regions and ensure that all local governments can provide a basic level of public services.
- Local Transfer Tax (地方譲与税): Certain national tax revenues (like fuel tax, vehicle tonnage tax) are transferred directly to local governments based on specific criteria.
The funds for this special account primarily come from designated portions of national taxes. However, the timing of when these taxes are collected by the national government doesn’t always perfectly match the timing when the local allocation and transfer taxes need to be paid out to local governments. Temporary borrowing is used to ensure the account has sufficient funds on hand to make these crucial payments to local authorities without delay.
The Auction Process
The government raises these temporary funds by holding auctions where financial institutions (like banks and securities firms) bid on the terms (primarily the interest rate or yield) at which they are willing to lend the money. The Ministry of Finance determines the amount needed and accepts the bids with the lowest yields until the required amount is met.
What the Results Show (Typical Information)
While the specific figures for this particular auction on May 13, 2025, are detailed on the linked MOF page, the results typically include:
- Amount Borrowed: The total amount of funds successfully raised through the auction.
- Successful Bid Yields: The interest rates (yields) at which the funds were borrowed. For short-term government borrowings in Japan’s current low-interest-rate environment, these yields are often very close to zero, or even 0.000%.
- Bid-to-Cover Ratio: This is an important indicator. It shows the total amount of bids received from financial institutions compared to the amount the government intended to borrow. A high ratio indicates strong demand from the market to lend to the government, suggesting confidence and ample liquidity in the financial system.
Significance of the Announcement
This announcement, while perhaps technical, signifies a standard and necessary part of the government’s financial operations.
- It confirms that the government is managing the cash flow of the Special Account for Local Allocation Tax and Local Transfer Tax effectively.
- The results of the auction, particularly the bid-to-cover ratio and the yield, provide insights into market demand for short-term government debt and the overall liquidity conditions in the Japanese financial market. Strong demand and low yields are typical for Japanese government borrowings and reflect their status as a safe asset.
Where to Find the Full Details
For those interested in the precise figures from the auction, including the specific amounts and rates, the full results were published on the Ministry of Finance’s website:
https://www.mof.go.jp/jgbs/auction/calendar/kariire/kari-result250513.htm
This release on May 13, 2025, at 4:00 AM JST is part of the routine transparency measures undertaken by the Ministry of Finance regarding government debt issuance and management.
交付税及び譲与税配付金特別会計の一時借入金の入札結果（令和7年5月13日入札）
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The following question was used to generate the response from Google Gemini:
At 2025-05-13 04:00, ‘交付税及び譲与税配付金特別会計の一時借入金の入札結果（令和7年5月13日入札）’ was published according to 財務省. Please write a detailed article with related information in an easy-to-understand manner. Please answer in English.
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