Purposes of Local Government Bonds

In principle, Local Governments may issue bonds to finance purposes stipulated in Article 5 of the Local Finance Law.
Such purposes include:

  • Operating public enterprises such as transport, gas, water supply and sewerage services:
  • Investments and loans;
  • Renewal relief works;
  • Constructing public facilities such as schools, nurseries, other educational or welfare facilities, and firefighters' facilities; and
  • Developing road, river, port and other public infrastructures

  • Hospital
    (Miyagi Prefecture)

  • Stadium
    (Saitama Prefecture)


  • Investment Infrastructure
    (Aichi Prefecture Nagoya City)

  • Hospital
    (Osaka City)


  • Sewerage
    (Kure City)

  • Museum
    (Kita Kyusyu City)

In addition, other statutory provisions authorize Local Governments to issue bonds for specific purposes. These include:

  • Depopulated Areas Special Measure Bonds, based on the Law on Special Measures to Stimulate Depopulated Areas;
  • Municipal Merger Special Measure Bonds, based on the Law on Special Measures to Promote Municipal Mergers;
  • Evacuation Facility Development Bonds, based on the Law on Special Measures for Active Volcanoes;
  • Mining Pollution Relief Bonds, based on the Local Finance Law

Further, special Local Government Bonds can be issued to ensure sufficient revenue sources for Local Governments. These include:

  • Tax-Reduction Supplementary Bonds, based on the Local Finance Special Measures Law;
  • Retirement Allowance Bonds, based on the Law on Special Measures to Promote Local Finance Rehabilitation;
  • Revenue Shortfall Bonds, based on the Basic Law on Disaster Relief Measures; and
  • Temporary Financial Measures Bonds, based on the Local Finance Law