Japanese National Railway Settlement Corporation
The Japanese National Railway Settlement Corporation inherited JNR's long-term liabilities (25.5 trillion yen) and a part of JNR assets as a result of the JNR reform. The objectives were to reduce or cancel the debt burden of the new JR companies, thus stabilize their management initially with a minimum of personnel. The organization sold off properties and JR shares to repay long-term debt, and provided services to ensure that former JNR workers not reemployed by JR companies would find alternative employment. However, the company failed to seize the opportunity to sell off JNR assets because of the freeze on property sales imposed during the bubble economy. The slump in the stock market then hampered their efforts to sell JR shares. As a result, liabilities grew to 27.7 trillion yen by the beginning of 1998. New legislation to deal with long-term liabilities was introduced in October 1998. The Japanese National Railway Settlement Corporation transferred all remaining duties to the Japan Railway Construction Public Corporation and disbanded on October 22 of the same year.
Long-term liabilities of JNR
At the time of the JNR reform, JNR had long-term liabilities and other debts totaling 37.1 trillion yen. Of this, the Japanese National Railway Settlement Corporation took over 25.5 trillion yen, excluding the portions transferred to three JR companies operating on the mainland and other new entities. The Japanese National Railway Settlement Corporation planned to repay the debts by selling excessive JNR properties and JR shares, then placing the remaining burden on the taxpayers. However, the escalation in property prices during the bubble economy forced them to postpone the property sell-off. The slump in the stock market then hampered efforts to sell JR shares. As a result, the organization's long-term liabilities grew to 27.7 trillion yen by the beginning of 1998, a level impossible to handle with the original repayment plan. Various possibilities were explored, including a new tax on railway usage or diverting funds from earmarked funds for road improvement. However, in October 1998, a law was enacted to deal with the long-term liabilities by approving the transfer of most liabilities to the general account. This means the taxpayers now shoulder the burden of long-term liabilities.
