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Long-term debts left at the JNR Settlement Corporation upon the JNR reform in April 1987 increased to about \27.7 trillion at the beginning of FY 1998, including new debts which emerged after the reform. Since the scheme to redeem the debts and pay the interests and pension liabilities by selling the corporation's land and equity assets no longer functional properly, the settlement of the JNR debts emerged as an urgent problem (Figure 41).
In response to the malfunction of the existing scheme, the
ruling Liberal Democratic Party start to consider how to settle JNR's debts
in November 1996, and the government-LDP Fiscal Structural Reform Council also
has begun to study the matter in October 1997. The Council, at its meeting on
December 17, 1997, passed the resolution on specific measures for the settlement
of JNR's long-term debts.
Following the resolution, the government decided to start the final settlement
of the JNR debt in FY 1998 at a cabinet meeting. Accordingly, the government
submitted the Bill for Disposal of Debts and Liabilities of Japanese National
Railways Settlement Corporation on February 20,1998.
The bill was partially amended before its passage on October 15, 1998, and the law took effect on October 22. Under the law, the government's general account took over interest-bearing debts (\15.2 trillion at the beginning of FY 1998) and the government wrote off interest-free debts (\8.3 trillion). Pension liabilities and other burdens (\3.5 trillion), which had been shouldered by the JNR Settlement Corporation upon the JNR reform, was taken over by the Japan Railway Construction Public Corporation. The burden of the merging cost (\0.8 trillion), which emerged at the absorption of the JR Group Mutual Aid Association into the Employee's Pension System in 1997, was shared between the Japan Railway Construction Public Corporation and the Japan Railways group. The JNR Settlement Corporation was dissolved on October 22, 1998 (Figures 42 and Figures 43).
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