Message from the President and CEO
Japan Finance Organization for Municipalities (JFM) is a joint funding organization established under the law of Japan, wholly owned by all local governments in Japan, with the objective of accurately meeting the funding needs of these governments by providing long-term, low-interest financing. With a solid financial foundation, JFM is dedicated to supporting the sound fiscal management of local governments, enhancing residents’ welfare, and contributing to the sustainable development of communities through its three core functions: lending, funding, and supporting local governments.
In light of recent developments in the financial market environment, the global economy has been significantly affected by geopolitical tensions such as the situation in the Middle East, as well as inflation trends and monetary policies of central banks. As a result, the outlook for interest rates and exchange rates remains unclear. Nevertheless, JFM remains resolute in its commitment to fulfilling its prescribed role with precision and reliability, ensuring that it continues to meet the evolving needs of local governments in these challenging times.
First, regarding lending operations, as of the end of fiscal 2025, the outstanding loan balance amounted to JPY 22.5 trillion. In fiscal 2026, an increased amount of JFM funding has been budgeted in the Local Government Borrowing Programme in order to address appropriate price pass-through amid rising prices and the promotion of social infrastructure development, including measures to tackle aging water supply and sewage systems. Based on this, we will continue to provide long-term, low-interest financing for projects of high priority for local governments and projects closely related to residents’ daily lives, thereby accurately meeting their funding needs.
To finance these loans, JFM primarily issues JFM bonds in the financial markets. As of the end of fiscal 2025, the outstanding balance of bonds and long-term bank loans amounted to JPY 18.8 trillion. To date, we have gained strong market confidence and have endeavored to accurately capture investor demand in issuing bonds. As a result, since August 2019, we have continued to issue bonds at yield levels comparable to those of local government bonds. In fiscal 2026, with a view to smoothing medium- to long-term funding volumes and responding to investors’ growing demand for shorter investment horizons, we included two-year bonds in our initial funding plan for the first time and proceeded with issuance in April. Going forward, we will continue to respond flexibly and precisely to changes in the financial market environment, ensuring stable fundraising.
In regard to local government support, JFM aims to be a trusted advisor in the fiscal management of local governments. To achieve this, we implement various initiatives by organically linking three pillars: “Research and Studies”, “Personnel Training and Practical Support”, and “Information Dissemination”. In fiscal 2025, under the project to strengthen administration and financial management of local governments, we dispatched advisors specializing in each support area 5,203 times—approximately 1.5 times the number in the previous fiscal year—while staying close to the needs of local governments. Through these efforts, we will continue to contribute to the fiscal soundness and financial stability of local governments.
Local governments are currently facing challenges such as population decline and inflation. Even under these circumstances, it remains essential to continue providing administrative services closely connected to residents’ daily lives without disruption. All of us at JFM are fully committed to realizing our mission of “Supporting local governments through finance to create a future for regions.” We will continue to diligently carry out our work to accurately meet the funding needs of local governments through stable fundraising, and to contribute to the sound fiscal management of local governments and the realization of sustainable communities. We kindly ask for the continued cooperation and support of all relevant parties.
NAITO Hisashi
President and CEO
2026