Japan Finance 18-K Annual report (foreign governments)

Exhibit 4

ERNST & YOUNG SHINNIHON	Certified Public Accountants	Tel : 03 3503 1100
	Hibiya Kokusai Bldg.	Fax : 03 3503 1197
	2-2-3, Uchisaiwai-cho
	Chiyoda-ku, Tokyo, Japan 100-0011
	C.P.O. Box 1196, Tokyo, Japan 100-8641

Report of Independent Auditors

To the Governor of Japan Bank for International Cooperation

We have audited the accompanying balance sheets of Japan Bank for International Cooperation as of March 31, 2007, and the related statements of operations, changes in net assets, and cash flows for the year then ended, all expressed in Japanese Yen. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Japan Bank for International Cooperation as of March 31, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.

The U.S. dollar amounts in the accompanying financial statements with respect to the year ended March 31, 2007 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1.

/s/ Ernst & Young ShinNihon

Ernst & Young ShinNihon

June 22, 2007

BALANCE SHEETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

		In millions of yen			In millions of yen			In millions of U.S. dollars
		March 31, 2007			March 31, 2006			March 31, 2007
Assets
Cash and due from banks (Note 3)		¥	328,991		¥	655,517		$	2,787
Securities (Notes 4 and 20)			110,079			119,535			932
Loans (Note 5)			18,828,849			19,023,649			159,499
Miscellaneous assets (Note 6)			261,162			276,038			2,212
Premises and equipment (Note 7)			—			25,873			—
Tangible fixed assets (Note 7)			25,060			—			212
Intangible fixed assets (Note 7)			3,514			—			30
Deferred charges on bonds and notes (Note 8)			1,066			4,230			9
Customers’ liabilities for acceptances and guarantees (Note 14)			1,496,958			1,066,099			12,681
Allowance for possible loan losses (Note 9)			(232,959	)		(273,120	)		(1,973	)
Total assets		¥	20,822,723		¥	20,897,824		$	176,389
		In millions of yen			In millions of yen			In millions of U.S. dollars
		March 31, 2007			March 31, 2006			March 31, 2007
Liabilities and equity
Liabilities
Bonds and notes (Note 10)		¥	1,976,086		¥	2,053,963		$	16,739
Borrowings (Note 11)			8,094,826			8,926,789			68,571
Miscellaneous liabilities (Note 12)			208,734			207,097			1,768
Reserve for bonus payments			1,027			1,020			9
Reserve for employee retirement benefits (Note 13)			16,179			16,473			137
Acceptances and guarantees (Note 14)			1,496,958			1,066,099			12,681
Total liabilities			11,793,812			12,271,443			99,905
Equity
Capital:
Capital attributable to the International Financial Account			—			985,500			—
Capital attributable to the Overseas Economic Cooperation Account			—			7,065,644			—
						8,051,144
Retained earnings:
Reserve attributable to the International Financial Account (Note 17)			—			709,148			—
Reserve attributable to the Overseas Economic Cooperation Account (Note 17)			—			111,324			—
Accumulated deficit			—			(245,236	)		—
						575,236
Total equity			—			8,626,381			—
Total liabilities and equity		¥	—		¥	20,897,824		$	—
Net assets
Capital:
Capital attributable to the International Financial Account			985,500			—			8,348
Capital attributable to the Overseas Economic Cooperation Account			7,231,508			—			61,258
			8,217,008			—			69,606
Retained earnings:
Other retained earnings
Reserve attributable to the International Financial Account (Note 17)			745,236			—			6,313
Reserve attributable to the Overseas Economic Cooperation Account (Note 17)	��		166,062			—			1,407
Accumulated deficit			(98,273	)		—			(833	)
			813,025						6,887
Total stockholders’ equity			9,030,033			—			76,493
Net deferred losses on hedges			(1,122	)		—			(9	)
Total valuation differences and translation adjustments			(1,122	)		—			(9	)
Total net assets			9,028,911			—			76,484
Total liabilities and net assets		¥	20,822,723		¥	—		$	176,389

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF OPERATIONS

JAPAN BANK FOR INTERNATIONAL COOPERATION

	In millions of yen		In millions of yen		In millions of U.S. dollars
	FY 2006		FY 2005		FY 2006
Income
Interest income	¥	587,793	¥	574,315	$	4,979
Interest on loans		572,467		562,289		4,849
Interest and dividend income on securities		6,781		5,728		58
Interest on due from banks		8,544		6,297		72
Fees and commissions		8,320		8,783		70
Other operating income		1,123		3,985		10
Foreign exchange gains		1,123		3,751		10
Gains on derivative instruments		0		—		0
Others		—		234		—
Other ordinary income		363		354		3
Grant from general account (Note 16)		30,000		30,000		254
Reversal of allowance for possible loan losses		40,160		34,644		340
Recovery of written-off claims		2,647		3,179		23
Profits on sales of premises and equipment		—		6		—
Profits on sales of tangible fixed assets		21		—		0
Total income		670,431		655,270		5,679
Expenses
Interest expenses		361,859		315,669		3,065
Interest on bonds and notes		72,236		64,137		612
Interest on borrowings		157,505		180,350		1,334
Interest on swaps (net)		132,117		71,181		1,119
Fees and commissions		5,917		5,870		50
Other operating expenses		1,203		1,292		10
Amortization of bonds and notes issuance costs		979		1,053		8
Losses on derivative instruments		17		—		0
Others		206		238		2
General and administrative expenses		25,951		22,636		220
Other ordinary expenses		1,540		247		13
Write-off of equities, securities, etc.		1,481		217		12
Others		59		29		1
Losses on disposal of premises and equipment		—		27		—
Losses on disposal of tangible fixed assets		81		—		1
Total expenses		396,554		345,742		3,359
Net income	¥	273,876	¥	309,527	$	2,320

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CASH FLOWS

JAPAN BANK FOR INTERNATIONAL COOPERATION

	In millions of yen			In millions of yen			In millions of U.S. dollars
	FY 2006			FY 2005			FY 2006
Cash flows from operating activities
Net income	¥	273,876		¥	309,527		$	2,320
Depreciation and amortization		1,919			1,398			16
Decrease in allowance for possible loan losses		(40,160	)		(80,544	)		(340	)
Increase in reserve for bonus payments		7			60			0
Decrease in reserve for employee retirement benefits		(294	)		(803	)		(2	)
Interest income		(587,793	)		(574,315	)		(4,979	)
Interest expenses		361,859			315,669			3,065
Net loss on securities		1,479			200			13
Foreign exchange gain		(10,453	)		(335,141	)		(89	)
Net loss on sales of premises and equipment		—			20			—
Net loss on sales of tangible fixed assets		59			—			1
Net decrease in loans		260,239			557,202			2,204
Net increase (decrease) in bonds and notes		(132,204	)		214,542			(1,120	)
Net decrease in borrowings		(831,963	)		(632,945	)		(7,048	)
Net decrease (increase) in due from banks (excluding cash equivalents)		108,035			(232,846	)		915
Interest received		600,014			593,469			5,083
Interest paid		(368,651	)		(317,173	)		(3,123	)
Others, net		7,691			290,237			65
Net cash (used in) provided by operating activities		(356,339	)		108,557			(3,019	)
Cash flows from investing activities
Purchases of securities		(573	)		(421	)		(5	)
Sales of securities		8,443			690			72
Purchases of premises and equipment		—			(711	)		—
Purchases of tangible fixed assets		(719	)		—			(6	)
Purchases of intangible fixed assets		(305	)		—			(3	)
Proceeds from sales of premises and equipment		—			27			—
Proceeds from sales of tangible fixed assets		28			—			0
Net cash provided by (used in) investing activities		6,873			(414	)		58
Cash flows from financing activities
Proceeds from issuance of capital stocks to government		165,864			174,400			1,405
Payment to National Treasury		(36,314	)		(34,726	)		(308	)
Net cash provided by financing activities		129,549			139,673			1,097
Effect of exchange rate changes on cash and cash equivalents		0			0			0
Net (decrease) increase in cash and cash equivalents		(219,915	)		247,817			(1,863	)
Cash and cash equivalents at the beginning of the period		318,608			70,790			2,699
Cash and cash equivalents at the end of the period	¥	98,692		¥	318,608		$	836

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

For the year ended March 31, 2007																							(In millions of yen)
	Stockholders’ equity																			Valuation differences and translation adjustments						Total net assets
	Capital						Retained earnings										Total stockholders’ equity
	Capital attributable to the International Financial Account		Capital attributable to the Overseas Economic Cooperation Account		Total capital stock		Other retained earnings							Total retained earnings						Net deferred losses on hedges			Total valuation differences and translation adjustments
							Reserve attributable to the International Financial Account		Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit
Balance at March 31, 2006	¥	985,500	¥	7,065,644	¥	8,051,144	¥	709,148	¥	111,324	¥	(245,236	)	¥	575,236		¥	8,626,381		¥	—		¥	—		¥	8,626,381
Changes during the accounting period:
Proceeds from issuance of capital stocks attributable to the International Financial Account		—		—		—		—		—		—			—			—			—			—			—
Proceeds from issuance of capital stocks attributable to the Overseas Economic Cooperation Account		—		165,864		165,864		—		—		—			—			165,864			—			—			165,864
Transfer to reserve attributable to the International Financial Account from accumulated deficit		—		—		—		36,087		—		(36,087	)		—			—			—			—			—
Payment to National Treasury from the International Financial Account		—		—		—		—		—		(36,087	)		(36,087	)		(36,087	)		—			—			(36,087	)
Transfer to reserve attributable to the Overseas Economic Cooperation Account from accumulated deficit		—		—		—		—		54,737		(54,737	)		—			—			—			—			—
Net income		—		—		—		—		—		273,876			273,876			273,876			—			—			273,876
Net changes in the items other than stockholders’ equity		—		—		—		—		—		—			—			—			(1,122	)		(1,122	)		(1,122	)
Net changes during the accounting period		—		165,864		165,864		36,087		54,737		146,962			237,788			403,652			(1,122	)		(1,122	)		402,529
Balance at March 31, 2007	¥	985,500	¥	7,231,508	¥	8,217,008	¥	745,236	¥	166,062	¥	(98,273	)	¥	813,025		¥	9,030,033		¥	(1,122	)	¥	(1,122	)	¥	9,028,911

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

For the year ended March 31, 2007																				(In millions of U.S. dollars)
	Stockholders’ equity																			Valuation differences and translation adjustments						Total net assets
	Capital						Retained earnings										Total stockholders’ equity			Net deferred losses on hedges			Total valuation differences and translation adjustments
	Capital attributable to the International Financial Account		Capital attributable to the Overseas Economic Cooperation Account		Total capital stock		Other retained earnings							Total retained earnings
							Reserve attributable to the International Financial Account		Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit
Balance at March 31, 2006	$	8,348	$	59,853	$	68,201	$	6,007	$	943	$	(2,077	)	$	4,873		$	73,074		$	—		$	—		$	73,074
Changes during the accounting period
Proceeds from issuance of capital stocks attributable to the International Financial Account		—		—		—		—		—		—			—			—			—			—			—
Proceeds from issuance of capital stocks attributable to the Overseas Economic Cooperation Account		—		1,405		1,405		—		—		—			—			1,405			—			—			1,405
Transfer to reserve attributable to the International Financial Account from accumulated deficit		—		—		—		306		—		(306	)		—			—			—			—			—
Payment to National Treasury from the International Financial Account		—		—		—		—		—		(306	)		(306	)		(306	)		—			—			(306	)
Transfer to reserve attributable to the Overseas Economic Cooperation Account from accumulated deficit		—		—		—		—		464		(464	)		—			—			—			—			—
Net income		—		—		—		—		—		2,320			2,320			2,320			—			—			2,320
Net changes in the items other than stockholders’ equity		—		—		—		—		—		—			—			—			(9	)		(9	)		(9	)
Net changes during the accounting period		—		1,405		1,405		306		464		1,244			2,014			3,419			(9	)		(9	)		3,410
Balance at March 31, 2007	$	8,348	$	61,258	$	69,606	$	6,313	$	1,407	$	(833	)	$	6,887		$	76,493		$	(9	)	$	(9	)	$	76,484

STATEMENTS OF EQUITY

JAPAN BANK FOR INTERNATIONAL COOPERATION

	In millions of yen
	Capital attributable to the International Financial Account		Capital attributable to the Overseas Economic Cooperation Account		Reserve attributable to the International Financial Account		Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit			Total Equity
Balance at March 31, 2005	¥	985,500	¥	6,891,244	¥	676,258	¥	85,490	¥	(463,150	)	¥	8,175,343
Transfer from net earnings accounted under the JBIC Law to reserve		—		—		32,889		25,833		(58,723	)		—
Payment to National Treasury		—		—		—		—		(32,889	)		(32,889	)
Issuance of capital from Government		—		174,400		—		—		—			174,400
Net income		—		—		—		—		309,527			309,527
Balance at March 31, 2006	¥	985,500	¥	7,065,644	¥	709,148	¥	111,324	¥	(245,236	)	¥	8,626,381
Appropriations:
Transfer from net earnings accounted under the JBIC Law to reserve		—		—		36,087		54,737		(90,825	)		—
Payment to National Treasury		—		—		—		��		(36,087	)		(36,087	)
Total	¥	—	¥	—	¥	36,087	¥	54,737	¥	(126,913	)	¥	(36,087	)
Unappropriated Accumulated deficit	¥	—	¥	—	¥	—	¥	—	¥	(372,149	)	¥	—

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTS

JAPAN BANK FOR INTERNATIONAL COOPERATION

1. Basis of presentation

The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC” or the “Bank”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

The Bank’s accounts are separated into the International Financial Account and the Overseas Economic Cooperation Account as required under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated according to the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing a separate account for each operation. In separating the accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts in accordance with certain pre-defined allocation rate.

Consolidated financial statements are not prepared since JBIC has no subsidiaries.

The amounts indicated in millions of yen are rounded down by omitting figures less than one million. Totals may therefore not add up exactly because of such omission.

Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥118.05=$1.00, the exchange rate as of March 31, 2007 has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

2. Significant accounting policies

(a) Cash and cash equivalents

“Cash and cash equivalents” as stated in the statements of cash flows consists of cash on hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.

(b) Securities

All securities are classified as “Available-for-sale securities” which have no market value and are carried at cost based on the moving average method.

(c) Valuation method for derivative financial instruments

All derivative financial instruments are carried at fair value, except for certain derivatives that are designated as hedging instruments as discussed below.

(d) Accounting for hedges of interest rate risks

(i) Hedge accounting

JBIC accounts for derivatives used for interest rate risk hedging purposes under the deferral method.

(ii) Hedging instruments and hedged items

Hedging instruments: interest rate swaps

Hedged items: loans, borrowings, bonds and notes

(iii) Hedging policy

JBIC enters into hedging transactions up to the amount of the hedged assets and liabilities.

(iv) Assessment of hedge effectiveness

JBIC assesses the effectiveness of designated hedges by measuring and comparing the change of fair value or cumulative change of cash flows of both hedging instruments and corresponding hedged items from the date of inception of the hedges to the assessment date.

(e) Accounting for hedges of foreign exchange risks

Hedge instruments used to hedge foreign exchange risks associated with various foreign currency denominated monetary assets and liabilities are accounted for using the deferral method, in accordance with the standard treatment of The Japanese Institute of Certified Public Accountants (“JICPA”) Industry Audit Committee Report No. 25.

The effectiveness of the hedging instruments described above, such as currency-swaps, exchange swaps and similar transactions, hedging the foreign exchange risks of monetary assets and liabilities denominated in foreign currencies is assessed by comparing the foreign currency position of the hedged monetary assets and liabilities with that of the hedging instruments.

(f) Foreign currency translation and revaluation method

JBIC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.

(g) Depreciation for fixed assets (premises and equipment)

(i) Tangible fixed assets

Tangible fixed assets are depreciated under the declining balance method over their useful economic lives except for buildings (excluding installed facilities) acquired on or after April 1, 1998, which are depreciated under the straight-line method, and the applicable share of estimated annual depreciation costs for the fiscal year is recorded based on the following range of useful lives.

The principal estimated useful economic lives are as follows:

Buildings: 38 years to 50 years

Equipment: 2 years to 20 years

(ii) Intangible fixed assets

Amortization of intangible fixed assets is computed by the straight-line method. Software used by JBIC is amortized over its useful life (5 years).

(h) Method of amortization for deferred charges

Until the previous fiscal year, discounts and premiums on bonds and notes had been separately capitalized and amortized under the straight-line method over the terms of redemption. However, in accordance with the partial revision of “Accounting Standards for Financial Instruments” as of August 11, 2006 (the Accounting Standards Board of Japan (“ASBJ”) Statement No.10), which should be applied from the fiscal period ending upon or after its public announcement, JBIC adopted the revised accounting standard effective this fiscal period, and Bonds and notes were stated at amortized cost (the straight line method). As a result, discounts on bonds and notes in “Deferred charges on bonds and notes”, premiums in “Miscellaneous liabilities” and “Bonds and notes” decreased by ¥2,213 million, ¥103 million and ¥2,109 million respectively.

Discounts on bonds and notes recorded on the balance sheet as of March 31, 2006 are amortized under the straight-line method over the terms of the bonds and notes by applying the previous accounting method and the unamortized balance is directly deducted from Bonds and notes, based on the tentative measure stipulated in the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No.19, August 11, 2006).

Until the previous fiscal year, Bonds and notes issuance costs were separately capitalized and amortized over 3 years by the Regulations of the Commercial Code of Japan. However, in accordance with the application of the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No.19, August 11, 2006) which should be applied from the fiscal period ending upon or after its public announcement, JBIC adopted the new accounting standard effective this fiscal period. As a result, Bonds and notes issuance costs in “Miscellaneous assets” and Net income increased by ¥45 million and Amortization of bonds and notes issuance costs in “Other operating expenses” decreased by ¥45 million.

Bonds and notes issuance costs recorded on the balance sheet as of March 31, 2006 are amortized over 3 years by applying the previous accounting method based on the tentative measure stipulated in the ASBJ report.

(i) Change in presentation on balance sheets

The appendix forms of “Banking Law Enforcement Regulations” (Ministry of Finance Ordinance No.10, 1982) have been revised by the “Cabinet Office Ordinance to Amend Part of Detailed Enforcement Regulations on Mutual Loan Business Law and Banking Law” (Cabinet Office Ordinance No.60, April 28, 2006). In accordance with the application of the revised “Banking Law Enforcement Regulations” effective this fiscal period, presentation of account items has been changed as follows:

(i) “Reserve attributable to the International Financial Account”, “Reserve attributable to the Overseas Economic Cooperation Account” and “Accumulated deficit” which had been included in “Retained earnings” was presented as “Reserve attributable to the International Financial Account”, “Reserve attributable to the Overseas Economic Cooperation Account” and “Accumulated deficit” in “Other retained earnings”, respectively.

(ii) The net realized and unrealized losses (gains) from hedging instruments formerly included in “Miscellaneous assets” (“Miscellaneous liabilities”) as deferred hedge losses (gains) are presented as “Net deferred gains(losses) on hedges” included in Valuation differences and translation adjustments.

(iii) “Premises and equipment” was divided into “Tangible fixed assets”, “Intangible fixed assets” and “Miscellaneous assets.”

(iv) “Software” was reclassified from “Miscellaneous assets” to “Intangible fixed assets.”

(j) Change in presentation on cash flows

Former “Net loss (gain) on sales of premises and equipment” is presented as “Net loss (gain) on sales of tangible fixed assets” following the change in description of former “Premises and equipment” on the balance sheet to “Tangible fixed assets”, “Intangible fixed assets” and others.

Former “Expenditures on premises and equipment” is presented as “Purchases of tangible fixed assets” and others, and former “Proceeds from sales of premises and equipment” is presented as “Proceeds from sales of tangible fixed assets” and others.

(k) Allowance for possible loan losses

The allowance for claims on debtors who are legally bankrupt (“Bankrupt borrowers”) or substantially bankrupt (“Substantially bankrupt borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5 (i) and the deductions of the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially bankrupt borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors other than Bankrupt borrowers, Substantially bankrupt borrowers and Potentially bankrupt borrowers is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.

The allowance for possible losses on specific overseas loans is provided based on the expected loss amount taking into consideration the political and economic situations of these countries.

All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessments.

(l) Reserve for bonus payments

Reserve for bonus payment is calculated and provided for based on estimated amounts of future payments attributable to the services that have been rendered by employees to the date of the balance sheet. Reserve for bonus payments to executive directors is included in the account.

(m) Reserve for employee retirement benefits

Allowance for employee retirement benefits represents the future payment for pension and retirement benefits to employees and executive directors, and is accrued based on the projected benefit obligations and the estimated pension plan assets at the fiscal period end.

The actuarial gain or loss is recognized in the year in which it arises.

(n) Lease transactions

Finance leases that do not involve the transfer of ownership to the lessee at the end of the lease term are accounted for as an operating lease.

(o) Consumption taxes

Consumption taxes, including local consumption tax, are excluded from the transaction amounts.

(p) Significant changes in accounting policies

In accordance with newly effective Accounting Standards Board Statement No.5 “Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005) and Accounting Standards Board Guidance No.8 “Guidance on Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005), “Total equity” was renamed as “Net assets” and divided into “Stockholders’ equity” and “Valuation differences and translation of adjustment” . The amount corresponding to conventional “Total equity” was ¥9,030,033 million at the balance sheet date.

Net assets portion of the financial statements are presented in accordance with revised “Ordinance Regarding Financial Statements.”

“Practical Solution on Investors’ Accounting for Limited-Liability Partnership and Limited-Liability Companies” (Practical Issues Task Force No.21, issued on September 8, 2006) is applicable for the fiscal period ending on or after September 8, 2006, the announcement date, and JBIC applied the new accounting pronouncement. This accounting change had no material impact on the financial statements.

3. Cash and cash equivalents

The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Cash and due from banks	¥	328,991		¥	655,517		$	2,787
Due from banks (*)		(230,299	)		(336,909	)		(1,951	)
Cash and cash equivalents	¥	98,692		¥	318,608		$	836
(*)    Excluding Due from Bank of Japan
4. Securities
Securities as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Equity	¥	108,008		¥	117,870		$	915
Other securities		2,070			1,665			17
	¥	110,079		¥	119,535		$	932

5. Loans

All of loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2007 and 2006 were as follows:

International Financial Account	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Bankrupt loans	¥	47,333	¥	47,333	$	401
Non-accrual loans		126,610		156,454		1,073
Past due loans (3 months or more)		—		2,714		—
Restructured loans		112,868		141,007		956
	¥	286,813	¥	347,510	$	2,430
Overseas Economic Cooperation Account	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Bankrupt loans	¥	—	¥	—	$	—
Non-accrual loans		76,876		96,998		651
Past due loans (3 months or more)		—		—		—
Restructured loans		185,191		184,691		1,569
	¥	262,068	¥	281,689	$	2,220

(a) “Bankrupt loans” refer to loans, after write-offs, on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons, and to borrowers who fall into the following categories:

• who have begun bankruptcy, settlement, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code, the Corporate Law or other similar laws of Japan

• who have had their transactions with the promissory note clearinghouse suspended, or

• who have begun similar proceedings under any foreign law

(b) “Non-accrual loans” are loans on which accrued interest income is not recognized, excluding loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

(c) “Past due loans (3 months or more)” are loans whose principal or interest payment is past due for three months or more, and which do not fall under the category of “Bankrupt loans” and “Non- accrual loans.”

(d) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g. reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repayments or renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall under the category of “Bankrupt loans,” “Non-accrual loans, “ and “Past due loans (3 months or more).”

(e) The amounts of Loans indicated in the table above are gross amounts prior to deduction of allowance for possible loan losses.

(f) In the event that a debtor country encounters temporary payment difficulties and requests debt rescheduling with respect to external public debt (whose creditors are Sovereigns, Trade Insurance Institutions and Export Credit Institutions, etc.) due to an unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed. Under such temporary liquidity assistance, the debtor carries out the Economic Restructuring Program that was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
International Financial Account	¥	347,972	¥	417,943	$	2,948
Overseas Economic Cooperation Account		1,246,893		1,262,313		10,562

          In terms of repayment probability of the loans rescheduled in the Paris Club, their nature as public debt, unlike loans provided by private financial institutions, provides an asset securing mechanism under such an international framework. Nonetheless, in order to facilitate comparison with private financial institutions, JBIC classifies those loans to borrowers classified under the assessment as “Watchlisted” (but not “Past due loans (3 months or more)”), that were rescheduled under the Paris Club as “Restructured loans.” The amount of such loans, included in “Restructured loans” in the above table, is ¥7,753 million ($66 million) of which ¥3,838 millon ($33 million) represents original principal attributable to the International Financial Account and ¥185,191 million ($1,569 million) of which ¥101,267 million ($858 million) represents original principal attributable to the Overseas Economic Cooperation Account as of March 31, 2007, and ¥20,470 million of which ¥10,890 millon represents original principal attributable to the International Financial Account and ¥184,691 million of which ¥96,407 million represents original principal attributable to the Overseas Economic Cooperation Account as of March 31, 2006 respectively.

(g) Upon special request, major creditor countries, including Japan, agreed at the Paris Club to offer a grace period (“Moratorium”) for countries affected by the Sumatra Earthquake and India Tsunami in December 2004, in order to support their reconstruction and recovery. During this Moratorium period creditor countries will not expect any debt payment on the due dates up to December 31, 2005, and will reschedule the repayment period of deferred debts for 5 years including a 1 year grace period.

As of the end of March 2007, of the affected countries, Indonesia and Sri Lanka had requested the Paris Club for the Moratorium. The amounts rescheduled repayment period for affected countries, as of the end of March 2007, were ¥7,460 million ($63 million) in the International Financial Account and ¥144,968 million ($1,228 million) in the Overseas Economic Cooperation Account.

Loans related to this Moratorium are not included in the loans described in (a) to (d) above, since lending terms has been modified based on an international agreement under this Moratorium to offer a grace period in order to support reconstruction and recovery of affected countries, and is therefore irrelevant to their debt-repayment ability.

(h) As JBIC’s debtors mainly require long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC provides commitment lines under which it lends necessary funds up to a predetermined amount, which is within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2007 and 2006 are ¥4,899,076 million($ 41,500 million) and ¥5,056,325 million respectively.

(i) With respect to claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt borrowers and Substantially bankrupt borrowers”), the residual booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees is written-off against the respective claims. The amounts of the accumulated write-offs as of March 31, 2007 and 2006 were ¥5,472 million ($46 million) and ¥5,489 million respectively.

6. Miscellaneous assets

Miscellaneous assets as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Prepaid expenses	¥	666	¥	867	$	5
Accrued income (a)		138,786		150,268		1,176
Derivatives		100,569		96,560		852
Deferred hedge losses		—		3,912		—
Preliminary payment to the National Treasury (b)		20,119		19,892		170
Other (c)		1,021		4,537		9
	¥	261,162	¥	276,038	$	2,212

(Notes)

(a) “Accrued income” includes ¥136,970 million ($1,160 million) and ¥148,324 million of accrued interest on loans and other as of March 31, 2007 and 2006 respectively.

(b) Pursuant to Article 44 of the JBIC Law, a portion of the net earnings on the General Account of the International Financial Account is paid to the National Treasury. Preliminary payment to the National Treasury, made on a best estimate basis, is accounted for on an accrual basis.

(c) “Other” includes ¥27 million ($0 million) of suspense payments and other as of March 31, 2007, and ¥168 million of suspense payments as of March 31, 2006.

7. Fixed assets(Premises and equipment)

Fixed assets(Premises and equipment) as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Tangible fixed assets
Land	¥	12,551	¥	12,551	$	106
Buildings		26,349		26,768		223
Equipment		5,045		4,965		43
Construction in progress		73		584		1
Total	¥	44,019	¥	44,869	$	373
Less-accumulated depreciation		18,958		19,495		161
Net book value	¥	25,060	¥	25,374	$	212
Intangible fixed assets
Software	¥	5,734	¥	5,292	$	49
Guarantee deposit		—		493		—
Other		66		66		0
Total	¥	5,801	¥	5,852	$	49
Less-accumulated depreciation		2,286		1,345		19
Net book value	¥	3,514	¥	4 ,506	$	30
8. Deferred charges on bonds and notes
Deferred charges on bonds and notes as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Discounts on bonds and notes	¥	—	¥	2,536	$	—
Bonds and notes issuance costs		1,066		1,694		9
	¥	1,066	¥	4,230	$	9
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
General allowance for possible loan losses	¥	73,933	¥	86,390	$	626
Specific allowance for possible loan losses		146,727		172,888		1,243
Allowance for possible losses on specific overseas loans		12,299		13,841		104
	¥	232,959	¥	273,120	$	1,973

10. Bonds and notes

Bonds and notes as of March 31, 2007 and 2006 were as follows:

Description of bonds and notes	Date of issuance	Currency and amounts March 31, 2007 (In millions)		Interest rate (%)	Maturity date	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Export-Import Bank of Japan Bonds guaranteed by Japanese govt. 37, 40, 42	May 1996- December 1997	EUR	1,044	5.750-6.625	May 2007- June 2008	¥	164,477	¥	231,280	$	1,393
Japan Bank for International Cooperation Bonds guaranteed By Japanese govt. 1, 4-14	November 1999- March 2007	JPY	60,000	0.350-7.000	March 2008- March 2016		981,901		982,683		8,318
		USD	5,399
		EUR	1,750
		THB	3,000
FILP Agency Bonds 2,4, 6, 8, 10, 12-25 (*)	October 2001- May 2006	JPY	829,706	0.540-2.090	September 2009- December 2025		829,706		830,000		7,028
Overseas Economic Cooperation Fund Bonds Guaranteedby Japanese govt. 9	November 1996		—	2.9	November 2006		—		10,000		—
						¥	1,976,086	¥	2,053,963	$	16,739

(*) Non-government guaranteed bonds issued in domestic market.

Scheduled redemptions of bonds and notes for each of the next five years as of March 31, 2007 were as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	176,518	$	1,495
2008		126,616		1,073
2009		167,919		1,422
2010		287,746		2,437
2011		356,265		3,018

Based on debt assumption agreements with financial institutions, JBIC has transferred the debt repayment obligation for certain bonds to such financial institutions. As of March 31, 2007, JBIC had contingent obligations in respect to the following bonds.

	In millions of yen		In millions of U.S. dollars
FILP Agency Bond 5	¥	50,000	$	424
FILP Agency Bond 7		60,000		508
FILP Agency Bond 9		50,000		424
FILP Agency Bond 11		50,000		424

11. Borrowings

Borrowings as of March 31, 2007 and 2006 were as follows:

	Average interest rate		Due date of Repayment	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Long-term borrowings
Borrowings from the Government Fund for Fiscal Investment and Loan Program	1.66	}	May 2007- October 2021	¥	8,030,213	¥	8,822,933	$	68,024
Borrowings from the Government Post Office Life Insurance Fund	1.99				64,613		103,856		547
				¥	8,094,826	¥	8,926,789	$	68,571

Long-term borrowings with maturities for the next five years as of March 31, 2007 were as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	1,444,506	$	12,236
2008		1,428,273		12,099
2009		1,030,028		8,725
2010		920,464		7,797
2011		739,804		6,267

12. Miscellaneous liabilities

Miscellaneous liabilities as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Accrued expenses (a)	¥	54,985	¥	61,424	$	466
Unearned income		7,780		5,041		66
Derivatives		143,734		137,705		1,217
Other (b)		2,234		2,925		19
	¥	208,734	¥	207,097	$	1,768

(Notes)

(a) “Accrued expenses” includes ¥28,485 million ($241 million) of accrued interest on borrowings and ¥25,546 million ($ 216 million) of accrued interest on bonds and notes and other as of March 31, 2007(March 31, 2006: ¥34,648million and ¥26,271 million respectively).

(b) “Other” includes ¥2,181 million ($18 million) of suspense receipts and other as of March 31, 2007 (March 31, 2006: ¥2,850 million).

13. Employee retirement benefits

JBIC has a defined benefit pension plan comprising of a welfare pension fund plan and lump-sum severance indemnity plan.

(a) The funded status of the pension plans

Disposition		March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Projected benefit obligation	(A)	¥	(23,416	)	¥	(23,222	)	$	(198	)
Fair value of plans’ assets	(B)		7,236			6,748			61
Unfunded pension obligation	(C) = (A) + (B)		(16,179	)		(16,473	)		(137	)
Unrecognized net obligation at transition	(D)		—			—			—
Unrecognized net actuarial gains/losses	(E)		—			—			—
Unrecognized prior service cost	(F)		—			—			—
Net amount recognized on the balance sheet	(G) = (C) + (D) + (E) + (F)		(16,179	)		(16,473	)		(137	)
Prepaid pension cost	(H)		—			—			—
Allowance for employee retirement benefits	(G) – (H)	¥	(16,179	)	¥	(16,473	)	$	(137	)

(Note) The projected benefit obligation above includes a portion in which the pension fund acts for the government welfare program.

(b) Component of pension cost

Disposition	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Service cost	¥	883		¥	939		$	8
Interest cost		462			456			4
Expected return on plans’ assets		(101	)		(85	)		(1	)
Amortization of prior service cost		—			—			—
Amortization of net actuarial gains/losses		37			(909	)		0
Amortization of net obligation at transition		—			—			—
Other costs		—			—			—
Net pension cost	¥	1,281		¥	402		$	11

(c) Principal assumptions made

	March 31, 2007		March 31, 2006
Discount rate	2.0	%	2.0	%
Expected rate of return on plan assets	1.5	%	1.5	%
Method of attributing the projected benefits to periods of services	Straight-line basis		Straight-line basis
Amortization period of prior service costs	—		—
Amortization period of actuarial gains/losses	Gains/losses are charged to net income for the year		Gains/losses are charged to net income for the year
Amortization period of net obligation at transition	—		—

14. Acceptances and guarantees

Acceptances and guarantees as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Acceptances	¥	—	¥	—	$	—
Guarantees		1,496,958		1,066,099		12,681
	¥	1,496,958	¥	1,066,099	$	12,681

15. Assets pledged as collateral

There were no assets pledged as collateral as of March 31, 2007 and 2006.

16. Grant from general account

In accordance with the “Changes of the Debt Relief Method” announced by the Japanese government on December 10, 2002, JBIC reported the extraordinary loss (“ODA-loan related losses”) for the year ended March 31, 2003. Under the policy to maintain the financial soundness of JBIC, the government provided JBIC a grant totaling ¥30 billion ($254 million) corresponding to “ODA-loan related losses” out of its general account for the fiscal year ended March 31, 2007 and 2006 respectively.

17. Reserve

Pursuant to Article 44 of the JBIC Law, the reserve attributable to the International Financial Account is provided from net earnings from the International Financial Account, and the reserve attributable to the Overseas Economic Cooperation Account is provided from or reversed to net earnings from the Overseas Economic Cooperation Account respectively.

18. Lease transactions

Lease transactions in the fiscal year ended March 31, 2007 and 2006 were as follows. There are no impairment losses for the leased asset.

(a) Finance lease transactions, excluding leases that ownership of the property are deemed to be substantially transferred to the lessee:

• Acquisition cost, accumulated depreciation and net balance of leased property as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Acquisition cost
Equipment	¥	658	¥	624	$	5
Other		549		506		5
Total	¥	1,207	¥	1,131	$	10
Accumulated depreciation
Equipment		476		316		4
Other		357		253		3
Total	¥	833	¥	569	$	7
Net balance
Equipment		182		308		1
Other		191		253		2
Total	¥	373	¥	561	$	3

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	237	¥	269	$	2
Due after 1 year		146		304		1
Total	¥	384	¥	574	$	3

• Lease payment, depreciation expense and interest expense for the fiscal year ended March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Lease payment	¥	285	¥	283	$	2
Depreciation expense		273		270		2
Interest expense		10		15		0

• Depreciation expense is calculated using the straight-line method over the useful economic life of the respective leased assets with zero residual value.

• The difference between total lease payments and the acquisition cost of leased assets is debited to effective interest expense and is allocated to each fiscal year using the interest method.

(b) Operating lease transactions:

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	5	¥	6	$	0
Due after 1 year		—		1		—
Total	¥	5	¥	8	$	0

19. Derivative transactions

Notes to derivative transactions in the fiscal year ended March 31, 2007 are as follows:

(a) Policy for derivative transactions

JBIC engages in derivative transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks associated with its lending and funding operations.

(b) Transactions

Derivative transactions include interest rate and currency swaps and forward exchange contracts.

(c) Risks involved in derivative transactions

Derivative transactions involve the following risks:

(i) Credit risk

Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under the contract governing transactions due to bankruptcy or deteriorating business.

(ii) Market risk

Potential loss from the changes in the market value of financial products due to fluctuations in interest rates or exchange rates.

(d) Policies for risk management on derivative transactions

(i) Credit risk

JBIC constantly monitors the market value of its derivative transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.

(ii) Market risk

JBIC uses derivative transactions solely for the purpose of hedging. Therefore, the market risk on derivative transactions and that on hedged (lending or funding) transactions basically offset each other.

	(In 100 millions of yen)					(In 100 millions of U.S. dollars)
Credit risk amounts of derivative etc.	Contract amount/ notional amount		Credit risk			Contract amount/ notional amount		Credit risk
Interest rate swaps	¥	26,097	¥	441		$	221	$	3
Currency swaps		45,921		3,987			389		34
Forward exchange contracts		23		0			0		0
Other derivatives		—		—			—		—
Credit risk reductions through nettings		—		(2,010	)		—		(17	)
Total	¥	72,042	¥	2,418		$	610	$	20

(Note) Credit risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations.

(e) Interest rate-related transactions

There were no interest rate-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting was applied to all interest rate-related derivative transactions outstanding at year end.

(f) Currency-related transactions

There were no currency-related derivative transactions, recorded at fair value as of the balance sheet date, since hedge accounting was applied to all currency-related derivative transactions outstanding at year end.

(g) Equity-related transactions

Not applicable

(h) Bond-related transactions

Not applicable

(i) Commodity-related transactions

Not applicable

(j) Credit Derivatives transactions

Not applicable

Notes to derivative transactions in the fiscal year ended March 31, 2006 are as follows:

(a) Policy for derivative transactions

JBIC engages in derivative transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.

(b) Transactions

Derivative transactions include interest rate and currency swaps and forward exchange contracts.

(c) Risks involved in derivative transactions

Derivative transactions involve the following risks:

(i) Credit risk

Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under the contract governing transactions due to bankruptcy or deteriorating business.

(ii) Market risk

Potential loss from the changes in the market value of financial products due to fluctuations in interest rates or exchange rates.

(d) Policies for risk management on derivative transactions

(i) Credit risk

JBIC constantly monitors the market value of its derivative transactions for each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.

(ii) Market risk

JBIC uses derivative transactions solely for the purpose of hedging. Therefore, the market risk on derivative transactions and that on hedged (lending or funding) transactions basically offset each other.

Credit risk amounts of derivative etc.	(In 100 millions of yen)
	Contract amount/ notional amount		Credit risk
Interest rate swaps	¥	25,003	¥	502
Currency swaps		44,152		3,969
Forward exchange contracts		60		1
Other derivatives		—		—
Credit risk reductions through nettings		—		(2,081	)
Total	¥	69,217	¥	2,392

(Note) Credit risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations.

(e) Interest rate-related transactions

There are no interest rate-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting is applied to all interest rate-related derivative transactions outstanding at year end.

(f) Currency-related transactions

There are no currency-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting is applied to all currency-related derivative transactions outstanding at year end.

(g) Equity-related transactions

Not applicable

(h) Bond-related transactions

Not applicable

(i) Commodity-related transactions

Not applicable

(j) Credit Derivatives transactions

Not applicable

20. Market value of securities

Notes to market value of securities as March 31, 2007 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

	March 31, 2007 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Sales amount	¥	5,000	$	42
Gains on sales		—		—
Losses on sales		—		—

(f) Held-to maturity debt securities and available-for-sale securities whose market value is not readily determinable were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—	$	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		107,194		908
Unlisted foreign equities		814		7
Other unlisted Japanese securities		253		2
Other unlisted foreign securities		1,817		15
Total	¥	110,079	$	932

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable

Notes to market value of securities as March 31, 2006 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

	March 31, 2006 (In millions of yen)		March 31, 2006 (In millions of U.S. dollars)
Sales amount	¥	128	$	1
Gains on sales		53		0
Losses on sales		—		—

(f) Held-to maturity debt securities and available-for-sale securities whose market value is not readily determinable were as follows:

	March 31, 2006 (In millions of yen)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		115,817
Unlisted foreign equities		2,053
Other unlisted Japanese securities		250
Other unlisted foreign securities		1,414
Total	¥	119,535

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable

ERNST & YOUNG SHINNIHON	Certified Public Accountants	Tel:  03 3503 1100
	Hibiya Kokusai Bldg.	Fax:  03 3503 1197
	2-2-3, Uchisaiwai-cho Chiyoda-ku, Tokyo, Japan 100-0011 C.P.O. Box 1196, Tokyo, Japan 100-8641

Report of Independent Auditors

To the Governor of Japan Bank for International Cooperation

We have audited the accompanying International Financial Account balance sheets of Japan Bank for International Cooperation as of March 31, 2007, and the related statements of operations, changes in net assets, and cash flows for the year then ended, all expressed in Japanese Yen. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Financial Account of Japan Bank for International Cooperation as of March 31, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.

The U.S. dollar amounts in the accompanying financial statements with respect to the year ended March 31, 2007 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1.

/s/ Ernst & Young ShinNihon

Ernst & Young ShinNihon

June 22, 2007

BALANCE SHEETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

	In millions of yen			In millions of yen			In millions of U.S. dollars
	March 31, 2007			March 31, 2006			March 31, 2007
Assets
Cash and due from banks (Note 3)	¥	260,732		¥	636,786		$	2,209
Securities (Notes 4 and 19)		804			400			7
Loans (Note 5)		7,888,505			8,080,007			66,823
Miscellaneous assets (Note 6)		198,249			205,162			1,679
Premises and equipment (Note 7)		—			18,901			—
Tangible fixed assets (Note7)		18,457			—			156
Intangible fixed assets (Note 7)		2,180			—			19
Deferred charges on bonds and notes (Note 8)		1,066			4,227			9
Customers’ liabilities for acceptances and guarantees (Note 14)		1,496,958			1,066,099			12,681
Allowance for possible loan losses (Note 9)		(130,061	)		(147,963	)		(1,102	)
Total assets	¥	9,736,893		¥	9,863,621		$	82,481
	In millions of yen			In millions of yen			In millions of U.S. dollars
	March 31, 2007			March 31, 2006			March 31, 2007
Liabilities and equity
Liabilities
Bonds and notes (Note 10)	¥	1,976,086		¥	2,043,963		$	16,739
Borrowings (Note 11)		4,380,023			4,906,569			37,103
Miscellaneous liabilities (Note 12)		194,629			189,951			1,649
Reserve for bonus payments		637			632			5
Reserve for employee retirement benefits (Note 13)		10,031			10,213			85
Acceptances and guarantees (Note 14)		1,496,958			1,066,099			12,681
Total liabilities		8,058,365			8,217,430			68,262
Equity
Capital:
Capital attributable to the International Financial Account		—			985,500			—
Retained earnings:
Reserve attributable to the International Financial Account (Note 16)		—			709,148			—
Accumulated deficit		—			(48,457	)		—
		—			(660,690	)		—
Total equity		—			1,646,190			—
Total liabilities and equity	¥	—		¥	9,863,621		$	—
Net assets
Capital:
Capital attributable to the International Financial Account		985,500			—			8,348
Retained earnings:
Other retained earnings
Reserve attributable to the International Financial Account (Note 16)		745,236			—			6,313
Accumulated deficit		(51,086	)		—			(433	)
		694,149			—			5,880
Total stockholders’ equity		1,679,649			—			14,228
Net deferred losses on hedges		(1,122	)		—			(9	)
Total valuation differences and translation adjustments		(1,122	)		—			(9	)
Total net assets		1,678,527			—			14,219
Total liabilities and net assets	¥	9,736,893		¥	—		$	82,481

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF OPERATIONS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

	In millions of yen		In millions of yen		In millions of U.S. dollars
	FY 2006		FY 2005		FY 2006
Income
Interest income	¥	340,956	¥	319,119	$	2,888
Interest on loans		332,441		312,822		2,816
Interest on due from banks		8,515		6,297		72
Fees and Commissions		7,759		8,097		66
Other operating income		1,100		3,840		9
Foreign exchange gains		1,099		3,606		9
Gains on derivative instruments		0		—		0
Others		—		234		—
Other ordinary income		205		191		2
Reversal of allowance for possible loan losses		17,901		—		152
Recovery of written-off claims		1,825		2,355		15
Profits on sales of premises and equipment		—		2		—
Profits on sales of tangible fixed assets		17		—		0
Total income		369,765		333,606		3,132
Expenses
Interest expenses		280,718		226,059		2,378
Interest on bonds and notes		72,052		63,522		610
Interest on borrowings		76,547		91,355		649
Interest on swaps (net)		132,117		71,181		1,119
Fees and Commissions		2,042		3,212		18
Other operating expenses		1,193		1,275		10
Amortization of bonds and notes issuance costs		979		1,053		8
Losses on derivative instruments		17		—		0
Others		195		221		2
General and administrative expenses		16,178		14,140		137
Other ordinary expenses		43		9,186		0
Provision for allowance for possible loan losses		—		9,158		—
Others		43		28		0
Losses on disposal of premises and equipment		—		20		—
Losses on disposal of tangible fixed assets		43		—		0
Total expenses		300,218		253,895		2,543
Net income	¥	69,546	¥	79,711	$	589

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CASH FLOWS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

	In millions of yen			In millions of yen			In millions of U.S. dollars
	FY 2006			FY 2005			FY 2006
Cash flows from operating activities
Net income	¥	69,546		¥	79,711		$	589
Depreciation and amortization		1,267			955			11
Decrease in allowance for possible loan losses		(17,901	)		(23,190	)		(152	)
Increase in reserve for bonus payments		4			37			0
Decrease in reserve for employee retirement benefits		(182	)		(497	)		(2	)
Interest income		(340,956	)		(319,119	)		(2,888	)
Interest expenses		280,718			226,059			2,378
Net loss on securities		43			26			0
Foreign exchange gain		(10,419	)		(334,982	)		(88	)
Net loss on sales of premises and equipment		—			18			—
Net loss on sales of tangible fixed assets		26			—			0
Net decrease in loans		256,940			760,051			2,177
Net increase (decrease) in bonds and notes		(122,204	)		229,542			(1,035	)
Net decrease in borrowings		(526,546	)		(452,707	)		(4,460	)
Net decrease (increase) in due from banks (excluding cash equivalents)		107,848			(251,814	)		914
Interest received		346,338			332,126			2,934
Interest paid		(285,199	)		(227,148	)		(2,416	)
Others, net		8,421			290,453			71
Net cash (used in) provided by operating activities		(232,253	)		309,522			(1,967	)
Cash flows from investing activities
Purchases of securities		(438	)		(309	)		(4	)
Sales of securities		—			1			—
Purchases of premises and equipment		—			(440	)		—
Purchases of tangible fixed assets		(445	)		—			(4	)
Purchases of intangible fixed assets		(189	)		—			(1	)
Proceeds from sales of premises and equipment		—			11			—
Proceeds from sales of tangible fixed assets		21			—			0
Net cash used in investing activities		(1,052	)		(737	)		(9	)
Cash flows from financing activities
Payment to National Treasury		(36,314	)		(34,726	)		(308	)
Net cash used in financing activities		(36,314	)		(34,726	)		(308	)
Effect of exchange rate changes on cash and cash equivalents		0			0			0
Net (decrease) increase in cash and cash equivalents		(269,619	)		274,058			(2,284	)
Cash and cash equivalents at the beginning of the period		300,742			26,683			2,548
Cash and cash equivalents at the end of the period	¥	31,122		¥	300,742		$	264

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

For the year ended March 31,2007																		(In millions of yen)
	Stockholders’ equity													Valuation differences and translation adjustments						Total net assets
	Capital		Retained earnings								Total stockholders’ equity			Net deferred losses on hedges			Total valuation differences and translation adjustments
			Other retained earnings
	Capital attributable to the International Financial Account		Reserve attributable to the International Financial Account		Accumulated deficit			Total retained earnings
Balance at March 31, 2006	¥	985,500	¥	709,148	¥	(48,457	)	¥	660,690		¥	1,646,190		¥	—		¥	—		¥	1,646,190
Changes during the accounting period
Proceeds from issuance of capital stocks attributable to the International Financial Account		—		—		—			—			—			—			—			—
Transfer to reserve attributable to the International Financial Account from accumulated deficit		—		36,087		(36,087	)		—			—			—			—			—
Payment to National Treasury from the International Financial Account		—		—		(36,087	)		(36,087	)		(36,087	)		—			—			(36,087	)
Net income		—		—		69,546			69,546			69,546			—			—			69,546
Net changes in the items other than stockholders’ equity		—		—		—			—			—			(1,122	)		(1,122	)		(1,122	)
Net changes during the accounting period		—		36,087		(2,628	)		33,459			33,459			(1,122	)		(1,122	)		32,336
Balance at March 31, 2007	¥	985,500	¥	745,236	¥	(51,086	)	¥	694,149		¥	1,679,649		¥	(1,122	)	¥	(1,122	)	¥	1,678,527

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

For the year ended March 31, 2007														(In millions of U.S. dollars)
	Stockholders’ equity													Valuation differences and translation adjustments						Total net assets
	Capital		Retained earnings								Total stockholders’ equity			Net deferred losses on hedges			Total valuation differences and translation adjustments
	Capital attributable to the International Financial Account		Other retained earnings					Total retained earnings
			Reserve attributable to the International Financial Account		Accumulated deficit
Balance at March 31, 2006	$	8,348	$	6,007	$	(410	)	$	5,597		$	13,945		$	—		$	—		$	13,945
Changes during the accounting period
Proceeds from issuance of capital stocks attributable to the International Financial Account		—		—		—			—			—			—			—			—
Transfer to reserve attributable to the International Financial Account from accumulated deficit		—		306		(306	)		—			—			—			—			—
Payment to National Treasury from the International Financial Account		—		—		(306	)		(306	)		(306	)		—			—			(306	)
Net income		—		—		589			589			589			—			—			589
Net changes in the items other than stockholders’ equity		—		—		—			—			—			(9	)		(9	)		(9	)
Net changes during the accounting period		—		306		(23	)		283			283			(9	)		(9	)		274
Balance at March 31, 2007	$	8,348	$	6,313	$	(433	)	$	5,880		$	14,228		$	(9	)	$	(9	)	$	14,219

STATEMENTS OF EQUITY

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

	In millions of yen
	Capital attributable to the International Financial Account		Reserve attributable to the International Financial Account		Accumulated deficit			Total Equity
Balance at March 31, 2005	¥	985,500	¥	676,258	¥	(62,388	)	¥	1,599,369
Transfer from net earnings accounted under the JBIC Law to reserve		—		32,889		(32,889	)		—
Payment to National Treasury		—		—		(32,899	)		(32,899	)
Net income		—		—		79,711			79,711
Balance at March 31, 2006	¥	985,500	¥	709,148	¥	(48,457	)	¥	1,646,190
Appropriations:
Transfer from net earnings accounted under the JBIC Law to reserve		—		36,087		(36,087	)		—
Payment to National Treasury		—		—		(36,087	)		(36,087	)
Total	¥	—	¥	36,087	¥	(72,175	)	¥	(36,087	)
Unappropriated Accumulated deficit	¥	—	¥	—	¥	(120,633	)	¥	—

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTS

JAPAN BANK FOR INTERNATIONAL COOPERATION

International Financial Account

1. Basis of presentation

The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC” or the “Bank”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

The Bank’s accounts are separated into the International Financial Account and the Overseas Economic Cooperation Account as required under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated according to the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing separate accounts for each operation. In separating the accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts in accordance with certain pre-defined allocation rate.

Consolidated financial statements are not prepared since JBIC has no subsidiaries.

The amounts indicated in millions of yen are rounded down by omitting figures less than one million. Totals may therefore not add up exactly because of such omission.

Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥118.05=$1.00, the exchange rate as of March 31, 2007, has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

2. Significant accounting policies

(a) Cash and cash equivalents

“Cash and cash equivalents” as stated in the statements of cash flows consists of cash on hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.

(b) Securities

All securities are classified as “Available-for-sale securities” which have no market value and are carried at cost based on the moving average method.

(c) Valuation method for derivative financial instruments

All derivative financial instruments are carried at fair value, except for certain derivatives that are designated as hedging instruments as discussed below.

(d) Accounting for hedges of interest rate risks

(i) Hedge accounting

JBIC accounts for derivatives used for interest rate risk hedging purposes under the deferral method.

(ii) Hedging instruments and hedged items

Hedging instruments: interest rate swaps

Hedged items: loans, borrowings, bonds and notes

(iii) Hedging policy

JBIC enters into hedging transactions up to the amount of the underlying hedged assets and liabilities.

(iv) Assessment of hedge effectiveness

JBIC assesses the effectiveness of designated hedges by measuring and comparing the change of fair value or cumulative change of cash flows of both hedging instruments and corresponding hedged items from the date of inception of the hedges to the assessment date.

(e) Accounting for hedges of foreign exchange risks

Hedge instruments used to hedge foreign exchange risks associated with various foreign currency denominated monetary assets and liabilities are accounted for using the deferral method, in accordance with the standard treatment of The Japanese Institute of Certified Public Accountants (JICPA) Industry Audit Committee Report No. 25.

The effectiveness of the hedging instruments described above, such as currency-swaps, exchange swaps and similar transactions, hedging the foreign exchange risks of monetary assets and liabilities denominated in foreign currencies is assessed by comparing the foreign currency position of the hedged monetary assets and liabilities with that of the hedging instruments.

(f) Foreign currency translation and revaluation method

JBIC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.

(g) Depreciation basis for fixed assets (premises and equipment)

(i) Tangible fixed assets

Tangible fixed assets are depreciated under the declining balance method over their useful economic lives except for buildings (excluding installed facilities) acquired on or after April 1, 1998, which are depreciated under the straight-line method, and the applicable share of estimated annual depreciation costs for the fiscal year is recorded based on the following range of useful lives.

The principal estimated useful economic lives are as follows:

Buildings: 38 years to 50 years

Equipment: 2 years to 20 years

(ii) Intangible fixed assets

Amortization of intangible fixed assets is computed by the straight-line method. Software used by JBIC is amortized over its useful life (5 years).

(h) Method of amortization for deferred charges

Until the previous fiscal year, discounts and premium on bonds and notes had been separately capitalized and amortized under the straight-line method over the terms of redemption. However, in accordance with the partial revision of “Accounting Standards for Financial Instruments” as of August 11, 2006 (the Accounting Standards Board of Japan (“ASBJ”) Statement No.10), which should be applied from the fiscal period ending upon or after its public announcement, JBIC adopted the revised accounting standard effective this fiscal period, and Bonds and notes were stated at amortized cost (the straight line method). As a result, discounts on bonds and notes in “Deferred Changes on bonds and notes”, premiums in “Miscellaneous liabilities” and “Bonds and notes” decreased by ¥2,213 million, ¥103 million and ¥2,109 million respectively.

Discounts on bonds and notes recorded on the balance sheet as of March 31, 2006 are amortized under the straight-line method over the terms of the bonds and notes by applying the previous accounting method and the unamortized balance is directly deducted from Bonds and notes, based on the tentative measure stipulated in the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No.19, August 11, 2006).

Until the previous fiscal year, Bonds and notes issuance costs were separately capitalized and amortized over 3 years by the Regulations of the Commercial Code of Japan. However, in accordance with the application of the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No.19, August 11, 2006) which should be applied from the fiscal period ending upon or after the public announcement, JBIC adopted the new accounting standard effective this fiscal period. As a result, Bonds and notes issuance costs in “Miscellaneous assets” and Net income increased by ¥45 million and Amortization of bonds and notes issuance costs in “Other operating expenses” decreased by ¥45 million.

Bonds and notes issuance costs recorded on the balance sheet as of March 31, 2006 are amortized over 3 years by applying the previous accounting method based on the tentative measure stipulated in the ASBJ report.

(i) Change in presentation on balance sheets

The appendix forms of “Banking Law Enforcement Regulations” (Ministry of Finance Ordinance No.10, 1982) have been revised by the “Cabinet Office Ordinance to Amend Part of Detailed Enforcement Regulations on Mutual Loan Business Law and Banking Law” (Cabinet Office Ordinance No.60, April 28, 2006). In accordance with the application of the revised “Banking Law Enforcement Regulations” effective this fiscal period, presentation of account items has been changed as follows:

(i) “Reserve attributable to the International Financial Account” and “Accumulated deficit” which had been included in “Retained earnings” was presented as “Reserve attributable to the International Financial Account” and “Accumulated deficit” in “Other retained earnings”, respectively.

(ii) The net realized and unrealized losses (gains) from hedging instruments formerly included in “Miscellaneous Assets” (“Miscellaneous liabilities”) as deferred hedge losses (gains) are presented as “Net deferred gains (losses) on hedges” included in Valuation differences and translation adjustments.

(iii) “Premises and equipment” was divided into “Tangible fixed assets”, “Intangible fixed assets” and “Miscellaneous assets.”

(iv) “Software” was reclassified from “Miscellaneous assets” to “Intangible fixed assets.”

(j) Change in presentation on cash flows

Former “Net loss (gain) on sales of premises and equipment” is presented as “Net loss (gain) on sales of tangible fixed assets” following the change in description of former “Premises and equipment” on the balance sheet to “Tangible fixed assets”, “Intangible fixed assets” and others.

Former “Expenditures on premises and equipment” is presented as “Purchases of tangible fixed assets” and others, and former “Proceeds from sales of premises and equipment” is presented as “Proceeds from sales of tangible fixed assets” and others.

(k) Allowance for possible loan losses

The allowance for claims on debtors who are legally bankrupt (“Bankrupt borrowers”) or substantially bankrupt (“Substantially bankrupt borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5 (i) and the deductions of the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially bankrupt borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors other than Bankrupt borrowers, Substantially bankrupt borrowers and Potentially bankrupt borrowers is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.

The allowance for possible losses on specific overseas loans is provided based on the expected loss amount taking into consideration the political and economic situations of these countries.

All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessment.

(l) Reserve for bonus payments

Reserve for bonus payments is calculated and provided for based on estimated amounts of future payments attributable to the services that have been rendered by employees to the date of the balance sheet. Reserve for bonus payments to executive directors is included in the account.

(m) Reserve for employee retirement benefits

Reserve for employee retirement benefits represents the future payment for pension and retirement benefits to employees and executive directors, and is accrued based on the projected benefit obligations and the estimated pension plan assets at the fiscal period end.

The actuarial gain or loss is recognized in the year in which it arises.

(n) Lease transactions

Finance leases that do not involve the transfer of ownership to the lessee at the end of the lease term are accounted for as an operating lease.

(o) Consumption taxes

Consumption taxes, including local consumption tax, are excluded from the transaction amounts.

(p) Significant changes in accounting policies

In accordance with newly effective Accounting Standards Board Statement No.5 “Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005) and Accounting Standards Board Guidance No.8 “Guidance on Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005), “Total equity” was renamed as “Net assets” and divided into “Stockholders’ equity” and “Valuation differences and translation of adjustment”. The amount corresponding to conventional “Total equity” was ¥1,679,649 million at the balance sheet date.

Net Assets portion of the financial statements are presented in accordance with revised “Ordinance Regarding Financial Statements.”

“Practical Solution on Investors’ Accounting for Limited-Liability Partnership and Limited-Liability Companies” (Practical Issues Task Force No.21, issued on September 8, 2006) is applicable for the fiscal period ending on or after September 8, 2006, the announcement date, and JBIC applied the new accounting pronouncement. This accounting change had no material impact on the financial statements.

3. Cash and cash equivalents

The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Cash and due from banks	¥	260,732		¥	636,786		$	2,209
Due from banks (*)		(229,610	)		(336,044	)		(1,945	)
Cash and cash equivalents	¥	31,122		¥	300,742		$	264

(*) Excluding Due from Bank of Japan

4. Securities

Securities as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Equity	¥	12	¥	12	$	0
Other securities		791		387		7
	¥	804	¥	400	$	7
5. Loans
All of loans are loans on deeds. The amounts reported on the balance sheets as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Bankrupt loans	¥	47,333	¥	47,333	$	401
Non-accrual loans		126,610		156,454		1,073
Past due loans (3 months or more)		—		2,714		—
Restructured loans		112,868		141,007		956
	¥	286,813	¥	347,510	$	2,430

(a) “Bankrupt loans” refer to loans, after write-offs, on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons, and to borrowers who fall into the following categories:

- who have begun bankruptcy, settlement, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code, the Corporate Law or other similar laws of Japan

- who have had their transactions with the promissory note clearinghouse suspended, or

- who have begun similar proceedings under any foreign law

(b) “Non-accrual loans” are loans on which accrued interest income is not recognized, excluding loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

(c) “Past due loans (3 months or more)” are loans whose principal or interest payment is past due for three months or more, and which do not fall under the category of “Bankrupt loans” and “Non- accrual loans.”

(d) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g. reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repayments or renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall under the category of “Bankrupt loans,” “Non-accrual loans,” and “Past due loans (3 months or more).”

(e) The amounts of Loans indicated in the table above are gross amounts prior to deduction of allowance for possible loan losses.

(f) In the event that a debtor country encounters temporary payment difficulties and requests debt rescheduling with respect to external public debt (whose creditors are Sovereigns, Trade Insurance Institutions and Export Credit Institutions, etc.) due to an unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed. Under such temporary liquidity assistance, the debtor carries out the Economic Restructuring Program that was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
International Financial Account	¥	347,972	¥	417,943	$	2,948

         In terms of repayment probability of the loans rescheduled in the Paris Club, their nature as public debt, unlike loans provided by private financial institutions, provides an asset securing mechanism under such an international framework. Nonetheless, in order to facilitate comparison with private financial institutions, JBIC classifies those loans to borrowers classified under the assessment as “Watchlisted” (but not “Past due loans (3 months or more)”), that were rescheduled under the Paris Club as “Restructured loans.” The amount of such loans, included in “Restructured loans” in the above table, is ¥7,753 million ($66 million) of which ¥3,838 millon ($33 million) represents original principal attributable to the International Financial Account as of March 31, 2007, ¥20,470 million of which ¥10,890 millon represents original principal as of March 31, 2006.

(g) Upon special request, major creditor countries, including Japan, agreed at the Paris Club to offer a grace period (“Moratorium”) for countries affected by the Sumatra Earthquake and India Tsunami in December 2004 in order to support their reconstruction and recovery. During this Moratorium period creditor countries will not expect any debt payment on the due dates up to December 31, 2005, and will reschedule the repayment period of deferred debts for 5 years including a 1 year grace period.

As of the end of March 2007, of the affected countries, Indonesia and Sri Lanka had requested the Paris Club for the Moratorium. The amounts rescheduled repayment period for affected countries, as of the end of March 2007, are ¥7,460 million ($63 million) in the International Financial Account.

Loans related to this Moratorium are not included in the loans described in (a) to (d) above, since lending terms has been modified based on an international agreement under this Moratorium to offer a grace period in order to support reconstruction and recovery of affected countries, and is therefore irrelevant to their debt-repayment ability.

(h) As JBIC’s debtors mainly require long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC provides commitment lines under which it lends necessary funds up to a predetermined amount, which is within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2007 and 2006 are ¥1,242,335 million ($10,524 million) and ¥1,388,562 million respectively.

(i) With respect to claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt borrowers and Substantially bankrupt borrowers”), the residual booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees is written-off against the respective claims. The amounts of the accumulated write-offs as of March 31, 2007 and 2006 are ¥5,472 million ($46 million) and ¥5,489 million respectively.

6. Miscellaneous assets

Miscellaneous assets as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Prepaid expenses	¥	172	¥	354	$	1
Accrued income (a)		77,186		81,840		654
Derivatives		100,569		96,560		852
Deferred hedge losses		—		3,912		—
Preliminary payment to the National Treasury (b)		20,119		19,892		170
Other (c)		201		2,601		2
	¥	198,249	¥	205,162	$	1,679

(Notes)

(a) “Accrued income” includes ¥75,578 million ($640 million) and ¥80,420 million of accrued interest on loans and other as of March 31, 2007 and 2006 respectively.

(b) Pursuant to Article 44 of the JBIC Law, a portion of the net earnings on the General Account of the International Financial Account is paid to the National Treasury. Preliminary payment to the National Treasury, made on a best estimate basis, is accounted for on an accrual basis.

(c) “Other” includes ¥27 million ($0 million) of suspense payments as of March 31, 2007 and ¥116 million of suspense payments as of March 31, 2006.

7. Fixed assets (Premises and equipment)

Fixed assets (Premises and equipment) as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Tangible fixed assets
Land	¥	9,556	¥	9,556	$	81
Buildings		19,364		19,496		164
Equipment		3,794		3,752		33
Construction in progress		45		362		0
Total	¥	32,760	¥	33,167	$	278
Less-accumulated depreciation		14,303		14,446		122
Net book value	¥	18,457	¥	18,720	$	156
Intangible fixed assets
Software	¥	3,555	¥	3,281	¥	30
Guarantee deposit		—		174		—
Other		66		66		1
Total	¥	3,622	¥	3,522	$	31
Less-accumulated depreciation		1,441		857		12
Net book value	¥	2,180	¥	2,665	$	19

8. Deferred charges on bonds and notes

Deferred charges on bonds and notes as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Deferred discounts on bonds and notes	¥	—	¥	2,532	$	—
Bonds and notes issuance costs		1,066		1,694		9
	¥	1,066	¥	4,227	$	9
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
General allowance for possible loan losses	¥	25,064	¥	40,872	$	213
Specific allowance for possible loan losses		92,698		93,249		785
Allowance for possible losses on specific overseas loans		12,299		13,841		104
	¥	130,061	¥	147,963	$	1,102

10. Bonds and notes

Bonds and notes as of March 31, 2007 and 2006 were as follows:

Description of Bonds and notes	Date of issuance	Currency and amounts March 31, 2007 (In millions)	Interest rate (%)	Maturity date	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Export-Import Bank of Japan Bonds guaranteed by Japanese govt. 37, 40, 42	May 1996- December 1997	EUR   1,044	5.750-6.625	May 2007- June 2008	¥	164,477	¥	231,280	$	1,393
Japan Bank for International Cooperation Bonds guaranteed by Japanese govt. 1,4-14	November 1999- March 2007	JPY  60,000 USD  5,399 EUR  1,750 THB  3,000	0.350-7.000	March 2008- March 2016		981,901		982,683		8,318
FILP Agency Bonds 2, 4, 6, 8, 10, 12-25(*)	October 2001- May 2006	JPY829,706	0.540-2.090	September 2009- December 2025		829,706		830,000		7,028
					¥	1,976,086	¥	2,043,963	$	16,739

(*) Non-government guaranteed bonds issued in domestic market.

Scheduled redemptions of bonds and notes for each of the next five years as of March 31, 2007 were as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	176,518	$	1,495
2008		126,616		1,073
2009		167,919		1,422
2010		287,746		2,437
2011		356,265		3,018
Based on debt assumption agreements with financial institutions, JBIC has transferred the debt repayment obligation for certain bonds to such financial institutions. As of March 31, 2007, JBIC had contingent obligations in respect to the following bonds.
	In millions of yen		In millions of U.S. dollars
FILP Agency Bond 5	¥	50,000	$	424
FILP Agency Bond 7		60,000		508
FILP Agency Bond 9		50,000		424
FILP Agency Bond 11		50,000		424

11. Borrowings

Borrowings as of March 31, 2007 and 2006 were as follows:

	Average interest rate		Due date of repayment	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Long-term borrowings
Borrowings from the Government Fund for Fiscal Investment and Loan Program	1.55	}	May 2007- March 2017	¥	4,342,505	¥	4,844,321	$	36,785
Borrowings from the Government Post Office Life Insurance Fund	2.09				37,518		62,248		318
				¥	4,380,023	¥	4,906,569	$	37,103

Long-term borrowings with maturities for the next five years as of March 31, 2007 were as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	1,060,140	$	8,980
2008		1,015,132		8,599
2009		599,829		5,081
2010		500,268		4,238
2011		366,042		3,101

12. Miscellaneous liabilities

Miscellaneous liabilities as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Accrued expenses (a)	¥	40,993	¥	45,310	$	347
Unearned income		7,780		5,041		66
Derivatives		143,734		137,705		1,218
Other (b)		2,121		1,894		18
	¥	194,629	¥	189,951	$	1,649

(Notes)

(a) “Accrued expenses” includes ¥14,852 million ($126 million) of accrued interest on borrowings and ¥25,546 million ($216 million) of accrued interest on bonds and notes and other as of March 31, 2007 (March 31, 2006: ¥18,710 million and ¥26,262 million respectively).

(b) “Other” includes ¥2,067 million ($18 million) of suspense receipts and other as of March 31, 2007 (March 31, 2006: ¥1,818 million).

13. Employee retirement benefits

JBIC has a defined benefit pension plan comprising of a welfare pension fund plan and lump-sum severance indemnity plan.

(a) The funded status of the pension plans

Disposition		March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Projected benefit obligation	(A)	¥	(14,518	)	¥	(14,397	)	$	(123	)
Fair value of plans’ assets	(B)		4,486			4,184			38
Unfunded pension obligation	(C) = (A) + (B)		(10,031	)		(10,213	)		(85	)
Unrecognized net obligation at transition	(D)		—			—			—
Unrecognized net actuarial gains/losses	(E)		—			—			—
Unrecognized prior service cost	(F)		—			—			—
Net amount recognized on the balance sheet	(G) = (C) + (D) + (E) + (F)		(10,031	)		(10,213	)		(85	)
Prepaid pension cost	(H)		—			—			—
Allowance for employee retirement benefits	(G) – (H)	¥	(10,031	)	¥	(10,213	)	$	(85	)
(Note) The projected benefit obligation above includes a portion in which the pension fund acts for the government welfare program. (b) Component of pension cost
Disposition		March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Service cost		¥	547		¥	582		$	5
Interest cost			286			283			2
Expected return on plans’ assets			(62	)		(52	)		(0	)
Amortization of prior service cost			—			—			—
Amortization of net actuarial gains/losses			23			(563	)		0
Amortization of net obligation at transition			—			—			—
Other costs			—			—			—
Net pension cost		¥	794		¥	249		$	7

(c) Principal assumptions made

	March 31, 2007		March 31, 2006
Discount rate	2.0	%	2.0	%
Expected rate of return on plan assets	1.5	%	1.5	%
Method of attributing the projected benefits to periods of services	Straight-line basis		Straight-line basis
Amortization period of prior service costs	—		—
Amortization period of actuarial gains/losses	Gains/losses are charged to net income for the year		Gains/losses are charged to net income for the year
Amortization period of net obligation at transition	—		—

14. Acceptances and guarantees

Acceptances and guarantees as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Acceptances	¥	—	¥	—	$	—
Guarantees		1,496,958		1,066,099		12,681
	¥	1,496,958	¥	1,066,099	$	12,681

15. Assets pledged as collateral

There were no assets pledged as collateral as of March 31, 2007 and 2006.

16. Reserve

Pursuant to Article 44 of the JBIC Law, the reserve attributable to the International Financial Account is provided from net earnings from the International Financial Account.

17. Lease transactions

Lease transactions in the fiscal year ended March 31, 2007 and 2006 were as follows. There are no impairment losses for the leased asset.

(a) Finance lease transactions, excluding leases that ownership of the property are deemed to be substantially transferred to the lessee:

• Acquisition cost, accumulated depreciation and net balance of leased property as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Acquisition cost
Equipment	¥	408	¥	387	$	3
Others		340		313		3
Total	¥	748	¥	701	$	6
Accumulated depreciation
Equipment		295		196		2
Others		221		156		2
Total	¥	516	¥	352	$	4
Net balance
Equipment		113		191		1
Others		118		156		1
Total	¥	231	¥	348	$	2

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	147	¥	167	$	1
Due after 1 year		91		188		1
Total	¥	238	¥	356	$	2

• Lease payment, depreciation expense and interest expense for the fiscal year ended March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Lease payment	¥	177	¥	175	$	1
Depreciation expense		169		167		1
Interest expense		6		9		0

• Depreciation expense is calculated using the straight-line method over the useful economic life of the respective leased assets with zero residual value.

• The difference between total lease payments and the acquisition cost of leased assets is debited to effective interest expense, and is allocated to each fiscal year using the interest method.

(b) Operating lease transactions:

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	3	¥	4	$	0
Due after 1 year		—		1		—
Total	¥	3	¥	5	$	0

18. Derivative transactions

Notes to derivative transactions in the fiscal year ended March 31, 2007 are as follows:

(a) Policy for derivative transactions

JBIC engages in derivative transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks associated with its lending and funding operations.

(b) Transactions

Derivative transactions include interest rate and currency swaps and forward exchange contracts.

(c) Risks involved in derivative transactions

Derivative transactions involve the following risks:

(i) Credit risk

Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under the contract governing transactions due to bankruptcy or deteriorating business.

(ii) Market risk

Potential loss from the changes in the market value of financial products due to fluctuations in interest rates or exchange rates.

(d) Policies for risk management on derivative transactions

(i) Credit risk

JBIC constantly monitors the market value of its derivative transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.

(ii) Market risk

JBIC uses derivative transactions solely for the purpose of hedging. Therefore, the market risk on derivative transactions and that on hedged (lending or funding) transactions basically offset each other.

	(In 100 millions of yen)					(In 100 millions of U.S. dollars)
Credit risk amounts of derivative etc.	Contract amount/ notional amount		Credit risk			Contract amount/ notional amount		Credit risk
Interest rate swaps	¥	26,097	¥	441		$	221	$	3
Currency swaps		45,921		3,987			389		34
Forward exchange contracts		23		0			0		0
Other derivatives		—		—			—		—
Credit risk reductions through nettings		—		(2,010	)		—		(17	)
Total	¥	72,042	¥	2,418		$	610	$	20

(Note) Credit risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations.

(e) Interest rate-related transactions

There were no interest rate-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting was applied to all interest rate-related derivative transactions outstanding at year end.

(f) Currency-related transactions

There were no currency-related derivative transactions, recorded at fair value as of the balance sheet date, since hedge accounting was applied to all currency-related derivative transactions outstanding at year end.

(g) Equity-related transactions

Not applicable

(h) Bond-related transactions

Not applicable

(i) Commodity-related transactions

Not applicable

(j) Credit derivatives transactions

Not applicable

Notes to derivative transactions in the fiscal year ended March 31, 2006 are as follows:

(a) Policy for derivative transactions

JBIC engages in derivative transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.

(b) Transactions

Derivative transactions include interest rate and currency swaps and forward exchange contracts.

(c) Risks involved in derivative transactions

Derivative transactions involve the following risks:

(i) Credit risk

Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under the contract governing transactions due to bankruptcy or deteriorating business.

(ii) Market risk

Potential loss from the changes in the market value of financial products due to fluctuations in interest rates or exchange rates.

(d) Policies for risk management on derivative transactions

(i) Credit risk

JBIC constantly monitors the market value of its derivative transactions for each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.

(ii) Market risk

JBIC uses derivative transactions solely for the purpose of hedging. Therefore, the market risk on derivative transactions and that on hedged (lending or funding) transactions basically offset each other.

	(In 100 millions of yen)
Credit risk amounts of derivative etc.	Contract amount/ notional amount		Credit risk
Interest rate swaps	¥	25,003	¥	502
Currency swaps		44,152		3,969
Forward exchange contracts		60		1
Other derivatives		—		—
Credit risk reductions through nettings		—		(2,081	)
Total	¥	69,217	¥	2,392

(Note) Credit risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations.

(e) Interest rate-related transactions

There are no interest rate-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting is applied to all interest rate-related derivative transactions outstanding at year end.

(f) Currency-related transactions

There are no currency-related derivative transactions recorded at fair value as of the balance sheet date, since hedge accounting is applied to all currency-related derivative transactions outstanding at year end.

(g) Equity-related transactions

Not applicable

(h) Bond-related transactions

Not applicable

(i) Commodity-related transactions

Not applicable

(j) Credit derivatives transactions

Not applicable

19. Market value of securities

Notes to market value of securities as March 31, 2007 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

Not applicable

(f) Held-to maturity debt securities and available-for-sale securities whose market value is not readily determinable were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—	$	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		12		0
Unlisted foreign equities		—		—
Other unlisted Japanese securities		253		2
Other unlisted foreign securities		537		5
Total	¥	804	$	7

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable

Notes to market value of securities as March 31, 2006 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

Not applicable

(f) Held-to maturity debt securities and available-for-sale securities whose market value is not readily determinable were as follows:

	March 31, 2006 (In millions of yen)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		12
Unlisted foreign equities		—
Other unlisted Japanese securities		250
Other unlisted foreign securities		136
Total	¥	400

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable

ERNST & YOUNG SHINNIHON	Certified Public Accountants	Tel : 03 3503 1100
	Hibiya Kokusai Bldg.	Fax : 03 3503 1197
	2-2-3, Uchisaiwai-cho Chiyoda-ku, Tokyo, Japan 100-0011 C.P.O. Box 1196, Tokyo, Japan 100-8641

Report of Independent Auditors

To the Governor of Japan Bank for International Cooperation

We have audited the accompanying Overseas Economic Cooperation Account balance sheets of Japan Bank for International Cooperation as of March 31, 2007, and the related statements of operations, changes in net assets, and cash flows for the year then ended, all expressed in Japanese Yen. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Overseas Economic Cooperation Account of Japan Bank for International Cooperation as of March 31, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.

The U.S. dollar amounts in the accompanying financial statements with respect to the year ended March 31, 2007 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1.

/s/ Ernst & Young ShinNihon

Ernst & Young ShinNihon

June 22, 2007

BALANCE SHEETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

	In millions of yen			In millions of yen			In millions of U.S. dollars
	March 31, 2007			March 31, 2006			March 31, 2007
Assets
Cash and due from banks (Note 3)	¥	68,258		¥	18,730		$	578
Securities (Notes 4 and 19)		109,275			119,135			926
Loans (Note 5)		10,940,343			10,943,642			92,676
Miscellaneous assets (Note 6)		62,913			70,876			533
Premises and equipment (Note 7)		—			6,972			—
Tangible fixed assets (Note 7)		6,603			—			56
Intangible fixed assets (Note 7)		1,334			—			11
Deferred charges on bonds and notes (Note 8)		—			3			—
Allowance for possible loan losses (Note 9)		(102,897	)		(125,156	)		(872	)
Total assets	¥	11,085,830		¥	11,034,203		$	93,908
	In millions of yen			In millions of yen			In millions of U.S. dollars
	March 31, 2007			March 31, 2006			March 31, 2007
Liabilities and equity
Liabilities
Bonds and notes (Note 10)	¥	—		¥	10,000		$	—
Borrowings (Note 11)		3,714,803			4,020,220			31,468
Miscellaneous liabilities (Note 12)		14,105			17,145			120
Reserve for bonus payments		390			387			3
Reserve for employee retirement benefits (Note 13)		6,148			6,259			52
Total liabilities		3,735,446			4,054,013			31,643
Equity
Capital:
Capital attributable to the Overseas Economic Cooperation Account		—			7,065,644			—
Retained earnings:
Reserve attributable to the Overseas Economic Cooperation Account (Note 16)		—			111,324			—
Accumulated deficit		—			(196,778	)		—
		—			(85,454	)		—
Total equity		—			6,980,190			—
Total liabilities and equity	¥	—		¥	11,034,203		$	—
Net assets
Capital:
Capital attributable to the Overseas Economic Cooperation Account		7,231,508			—			61,258
Retained earnings:
Other retained earnings
Reserve attributable to the Overseas Economic Cooperation Account (Note 16)		166,062			—			1,407
Accumulated deficit		(47,187	)		—			(400	)
		118,875			—			1,007
Total stockholders’ equity		7,350,383			—			62,265
Net deferred losses on hedges		—			—			—
Total valuation differences and translation adjustments		—			—			—
Total net assets		7,350,383			—			62,265
Total liabilities and net assets	¥	11,085,830		¥	—		$	93,908

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF OPERATIONS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

	In millions of yen		In millions of yen		In millions of U.S.dollars
	FY 2006		FY 2005		FY 2006
Income
Interest income	¥	246,837	¥	255,196	$	2,091
Interest on loans		240,025		249,467		2,033
Interest and dividend income on securities		6,781		5,728		58
Interest on due from banks		29		0		0
Fees and Commissions		560		686		5
Other operating income		23		145		0
Foreign exchange gains		23		145		0
Other ordinary income		157		163		1
Grant from general account (Note 15)		30,000		30,000		254
Reversal pf allowance for possible loan losses		22,259		43,802		189
Recovery of written-off claims		822		824		7
Profits on sales of premises and equipment		—		4		—
Profits on sales of tangible fixed assets		4		—		0
Total income		300,665		330,822		2,547
Expenses
Interest expenses		81,141		89,609		687
Interest on bonds and notes		183		614		1
Interest on borrowings		80,957		88,995		686
Fees and Commissions		3,874		2,657		33
Other operating expenses		10		17		0
Others		10		17		0
General and administrative expenses		9,773		8,495		83
Other ordinary expenses		1,497		218		13
Write-off of equities, securities, etc.		1,481		217		13
Others		16		1		0
Losses on disposal of premises and equipment		—		6		—
Losses on disposal of tangible fixed assets		37		—		0
Total expenses		96,336		101,005		816
Net income	¥	204,329	¥	229,816	$	1,731

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CASH FLOWS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

	In millions of yen			In millions of yen			In millions of U.S.dollars
	FY 2006			FY 2005			FY 2006
Cash flows from operating activities
Net income	¥	204,329		¥	229,816		$	1,731
Depreciation and amortization		651			442			6
Decrease in allowance for possible loan losses		(22,259	)		(57,354	)		(189	)
Inecrease in reserve for bonus payments		2			22			0
Decrease in reserve for employee retirement benefits		(111	)		(305	)		(1	)
Interest income		(246,837	)		(255,196	)		(2,091	)
Interest expenses		81,141			89,609			687
Net loss on securities		1,436			174			12
Foreign exchange gain		(33	)		(159	)		(0	)
Net loss on sales of premises and equipment		—			2			—
Net loss on sales of tangible fixed assets		33		��	—			0
Net decrease (increase) in loans		3,298			(202,849	)		28
Net decrease in bonds and notes		(10,000	)		(15,000	)		(85	)
Net decrease in borrowings		(305,417	)		(180,238	)		(2,587	)
Net decrease in due from banks (excluding cash equivalents)		186			18,968			2
Interest received		253,676			261,342			2,149
Interest paid		(83,452	)		(90,024	)		(707	)
Others, net		(730	)		(215	)		(6	)
Net cash used in operating activities		(124,086	)		(200,965	)		(1,051	)
Cash flows from investing activities
Purchases of securities		(135	)		(111	)		(1	)
Sales of securities		8,443			689			72
Purchases of premises and equipment		—			(270	)		—
Purchases of tangible fixed assets		(273	)		—			(3	)
Purchases of intangible fixed assets		(116	)		—			(1	)
Proceeds from sales of premises and equipment		—			16			—
Proceeds from sales of tangible fixed assets		6			—			0
Net cash provided by investing activities		7,925			323			67
Cash flows from financing activities
Proceeds from issuance of capital stocks from government		165,864			174,400			1,405
Net cash provided by financing activities		165,864			174,400			1,405
Effect of exchange rate changes on cash and cash equivalents		0			0			0
Net increase (decrease) in cash and cash equivalents		49,703			(26,241	)		421
Cash and cash equivalents at the beginning of the period		17,865			44,106			151
Cash and cash equivalents at the end of the period	¥	67,569		¥	17,865		$	572

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

For the year ended March 31,2007	(In millions of yen)
	Stockholders’ equity												Valuation differences and translation adjustments				Total net assets
	Capital		Retained earnings								Total stockholders’ equity		Net deferred losses on hedges		Total valuation differences and translation adjustments
	Capital attributable to the Overseas Economic Cooperation Account		Other retained earnings					Total retained earnings
			Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit
Balance at March 31, 2006	¥	7,065,644	¥	111,324	¥	(196,778	)	¥	(85,454	)	¥	6,980,190	¥	—	¥	—	¥	6,980,190
Changes during the accounting period
Proceeds from issuance of capital stocks attributable to the Overseas Economic Cooperation Account		165,864		—		—			—			165,864		—		—		165,864
Transfer to reserve attributable to the Overseas Economic Cooperation Account from accumulated deficit		—		54,737		(54,737	)		—			—		—		—		—
Net income		—		—		204,329			204,329			204,329		—		—		204,329
Net changes in the items other than stockholders’ equity		—		—		—			—			—		—		—		—
Net changes during the accounting period		165,864		54,737		149,591			204,329			370,193		—		—		370,193
Balance at March 31, 2007	¥	7,231,508	¥	166,062	¥	(47,187	)	¥	118,875		¥	7,350,383	¥	—	¥	—	¥	7,350,383

STATEMENTS OF CHANGES IN NET ASSETS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

For the year ended March 31,2007	(In millions of U.S. dollars)
	Stockholders’ equity												Valuation differences and translation adjustments				Total net assets
	Capital		Retained earnings								Total stockholders’ equity		Net deferred losses on hedges		Total valuation differences and translation adjustments
	Capital attributable to the Overseas Economic Cooperation Account		Other retained earnings					Total retained earnings
			Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit
Balance at March 31, 2006	$	59,853	$	943	$	(1,667	)	$	(724	)	$	59,129	$	—	$	—	$	59,129
Changes during the accounting period
Proceeds from issuance of capital stocks attributable to the Overseas Economic Cooperation Account		1,405		—		—			—			1,405		—		—		1,405
Transfer to reserve attributable to the Overseas Economic Cooperation Account from accumulated deficit		—		464		(464	)		—			—		—		—		—
Net income		—		—		1,731			1,731			1,731		—		—		1,731
Net changes in the items other than stockholders’ equity		—		—		—			—			—		—		—		—
Net changes during the accounting period		1,405		464		1,267			1,731			3,136		—		—		3,136
Balance at March 31, 2007	$	61,258	$	1,407	$	(400	)	$	1,007		$	62,265	$	—	$	—	$	62,265

STATEMENTS OF EQUITY

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

	In millions of yen
	Capital attributable to the Overseas Economic Cooperation Account		Reserve attributable to the Overseas Economic Cooperation Account		Accumulated deficit			Total Equity
Balance at March 31, 2005	¥	6,891,244	¥	85,490	¥	(400,761	)	¥	6,575,973
Transfer from net earnings accounted under the JBIC Law to reserve		—		25,833		(25,833	)		—
Issuance of capital from Government		174,400		—		—			174,400
Net income		—		—		229,816			229,816
Balance at March 31, 2006	¥	7,065,644	¥	111,324	¥	(196,778	)	¥	6,980,190
Appropriations:
Transfer from net earnings accounted under the JBIC Law to reserve		—		54,737		(54,737	)		—
Total	¥	—	¥	54,737	¥	54,737		¥	—
Unappropriated Accumulated deficit	¥	—	¥	—	¥	(251,516	)	¥	—

See accompanying “Notes to Financial Statements” which are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTS

JAPAN BANK FOR INTERNATIONAL COOPERATION

Overseas Economic Cooperation Account

1. Basis of presentation

The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC” or the “Bank”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

The Bank’s accounts are separated into the International Financial Account and the Overseas Economic Cooperation Account as required under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated according to the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing a separate account for each operation. In separating the accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts in accordance with certain pre-defined allocation rate.

Consolidated financial statements are not prepared since JBIC has no subsidiaries.

The amounts indicated in millions of yen are rounded down by omitting figures less than one million. Totals may therefore not add up exactly because of such omission.

Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥118.05=$1.00, the exchange rate as of March 31, 2007, has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

2. Significant accounting policies

(a) Cash and cash equivalents

“Cash and cash equivalents” as stated in the statements of cash flows consists of cash on hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.

(b) Securities

All securities are classified as “Available-for-sale securities” which have no market value and are carried at cost based on the moving average method.

(c) Foreign currency translation and revaluation method

JBIC maintains its accounting record in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.

(d) Depreciation basis for fixed assets (premises and equipment)

(i) Tangible fixed assets

Tangible fixed assets are depreciated under the declining balance basis over their useful economic lives except for buildings (excluding installed facilities) acquired on or after April 1, 1998, which are depreciated under the straight-line method, and the applicable share of estimated annual depreciation costs for the fiscal year is recorded based on the following range of useful lives.

The principal estimated useful economic lives are as follows:

Buildings: 38 years to 50 years

Equipment: 2 years to 20 years

(ii) Intangible fixed assets

Amortization of intangible fixed assets is computed by the straight-line method. Software used by JBIC is amortized over its useful life (5 years).

(e) Method of amortization for deferred charges

         Until the previous fiscal year, discounts and premiums on bonds and notes had been separately capitalized and amortized under the straight-line method over the terms of redemption. However, in accordance with the partial revision of “Accounting Standards for Financial Instruments” as of August 11, 2006 (the Accounting Standards Board of Japan (“ASBJ”) Statement No.10), which should be applied from the fiscal period ending upon or after its public announcement, JBIC adopted the revised accounting standard effective this fiscal period, and Bonds and notes were stated at amortized cost (the straight line method). This accounting change had no material impact on the financial statements.

Discounts on bonds and notes recorded on the balance sheet as of March 31, 2006 are amortized under the straight-line method over the terms of the bonds and notes by applying the previous accounting method and the unamortized balance is directly deducted from Bonds and notes, based on the tentative measure stipulated in the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No.19, August 11, 2006).

(f) Change in presentation on balance sheets

The appendix forms of “Banking Law Enforcement Regulations” (Ministry of Finance Ordinance No.10, 1982) have been revised by the “Cabinet Office Ordinance to Amend Part of Detailed Enforcement Regulations on Mutual Loan Business Law and Banking Law” (Cabinet Office Ordinance No.60, April 28, 2006). In accordance with the application of the revised “Banking Law Enforcement Regulations” effective this fiscal period, presentation of account items has been changed as follows:

(i) “Reserve attributable to the Overseas Economic Cooperation Account” and “Accumulated deficit” which had been included in “Retained earnings” was presented as “Reserve attributable to the Overseas Economic Cooperation Account” and “Accumulated deficit” in “Other retained earnings”, respectively.

(ii) “Premises and equipment” was divided into “Tangible fixed assets,” “Intangible fixed assets” and “Miscellaneous assets.”

(iii) “Software” was reclassified from “Miscellaneous assets” to “Intangible fixed assets.”

(g) Change in presentation on cash flows

Former “Net loss (gain) on sales of premises and equipment” is presented as “Net loss (gain) on sales of tangible fixed assets” following the change in description of former “Premises and equipment” on the balance sheet into “Tangible fixed assets,” “Intangible fixed assets” and others.

Former “Expenditures on premises and equipment” is presented as “Purchases of tangible fixed assets” and others, and former “Proceeds from sales of premises and equipment” is presented as “Proceeds from sales of tangible fixed assets” and others.

(h) Allowance for possible loan losses

The allowance for claims on debtors who are legally bankrupt (“Bankrupt borrowers”) or substantially bankrupt (“Substantially bankrupt borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5 (i) and the deductions of the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt(“Potentially bankrupt borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors other than Bankrupt borrowers, Substantially bankrupt borrowers and Potentially bankrupt borrowers is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.

The allowance for possible losses on specific overseas loans is provided based on the expected loss amount taking into consideration the political and economic situations of these countries.

All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessment.

(i) Reserve for bonus payments

Reserve for bonus payments is calculated and provided for based on estimated amounts of future payments attributable to the services that have been rendered by employees to the date of the balance sheet. Reserve for bonus payments to executive directors is included in the account.

(j) Reserve for employee retirement benefits

Reserve for employee retirement benefits represents the future payment for pension and retirement benefits to employees and executive directors, and is accrued based on the projected benefit obligations and the estimated pension plan assets at the fiscal period end.

The actuarial gain or loss is recognized in the year in which it arises.

(k) Lease transactions

Finance leases that do not involve the transfer of ownership to the lessee at the end of the lease term are accounted for as an operating lease.

(l) Consumption taxes

Consumption taxes, including local consumption tax, are excluded from the transaction amounts.

(m) Significant changes in accounting policies

In accordance with newly effective Accounting Standards Board Statement No.5 “Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005) and Accounting Standards Board Guidance No.8 “Guidance on Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005), “Total equity” was renamed as “Net assets” and divided into “Stockholders’ equity” and “Valuation differences and translation of adjustment”. The amount corresponding to conventional “Total equity” was ¥7,350,383 million at the balance sheet date.

Net Assets portion of the financial statements are presented in accordance with revised “Ordinance Regarding Financial Statements.”

“Practical Solution on Investors’ Accounting for Limited-Liability Partnership and Limited-Liability Companies” (Practical Issues Task Force No.21, issued on September 8, 2006) is applicable for the fiscal period ending on or after September 8, 2006, the announcement date, and JBIC applied the new accounting pronouncement. This accounting change had no material impact on the financial statements.

3. Cash and cash equivalents

The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2007, and 2006 were as follows:

	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Cash and due from banks	¥	68,258		¥	18,730		$	578
Due from banks (*)		(689	)		(864	)		(6	)
Cash and cash equivalents	¥	67,569		¥	17,865		$	572
___________           (*)    Excluding Due from Bank of Japan
4. Securities
Securities as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Equity	¥	107,996		¥	117,858		$	915
Other securities		1,279			1,277			11
	¥	109,275		¥	119,135		$	926
5. Loans
All of loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2007 were 2006 are as follows:
	March 31, 2007 (In millions of yen)			March 31, 2006 (In millions of yen)			March 31, 2007 (In millions of U. S. dollars)
Bankrupt loans	¥	—		¥	—		$	—
Non-accrual loans		76,876			96,998			651
Past due loans (3 months or more)		—			—			—
Restructured loans		185,191			184,691			1,569
	¥	262,068		¥	281,689		$	2,220

(a) “Bankrupt loans” refer to loans, after write-offs, on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons, and to borrowers who fall into the following categories:

- who have begun bankruptcy, settlement, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code, the Corporate Law or other similar laws of Japan

- who have had their transactions with the promissory note clearinghouse suspended, or

- who have begun similar proceedings under any foreign law

(b) “Non-accrual loans” are loans on which accrued interest income is not recognized, excluding loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

(c) “Past due loans (3 months or more)” are loans whose principal or interest payment is past due for three months or more, and which do not fall under the category of “Bankrupt loans” and “Non- accrual loans.”

(d) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g. reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repayments or renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall under the category of “Bankrupt loans,” “Non-accrual loans” and “Past due loans (3 months or more).”

(e) The amounts of Loans indicated in the table above are the gross amounts prior to deduction of allowance for possible loan losses.

(f) In the event that a debtor country encounters temporary payment difficulties and requests debt rescheduling with respect to external public debt (whose creditors are Sovereigns, Trade Insurance Institutions and Export Credit Institutions, etc.) due to an unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed. Under such temporary liquidity assistance, the debtor carries out Economic Restructuring Program that was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Overseas Economic Cooperation Account	¥	1,246,893	¥	1,262,313	$	10,562

In terms of repayment probability of the loans rescheduled in the Paris Club, their nature as public debt, unlike loans provided by private financial institutions, provides an asset securing mechanism under such an international framework. Nonetheless, in order to facilitate comparison with private financial institutions, JBIC classifies those loans to borrowers classified under the self assessment as “Watchlisted” (but not “Past due loans (3 months or more)”), that were rescheduled under the Paris Club as “Restructured loans.” The amount of such loans, included in “Restructured loans” in the above table, is ¥185,191 million ($1,569 million) of which ¥101,267 million ($858 million) represents original principal attributable to the Overseas Economic Cooperation Account as of March 31, 2007, and ¥184,691 million of which ¥96,407 million represents original principal as of March 31, 2006.

(g) Upon special request, major creditor countries, including Japan, agreed at the Paris Club to offer grace period (“Moratorium”) for countries affected by the Sumatra Earthquake and India Tsunami in December 2004, in order to support their reconstruction and recovery. During this Moratorium period creditor countries will not expect any debt payment on the due date up to December 31, 2005, and will reschedule the repayment period of deferred debts for 5 years including a 1 year grace period.

As of the end of March 2007, of the affected countries, Indonesia and Sri Lanka had requested the Paris Club for the Moratorium. The amounts rescheduled repayment period for affected countries who requested the Moratorium were ¥144,968 million ($1,228 million) in the Overseas Economic Cooperation Account.

Loans related to this Moratorium are not included in the loans described in (a) to (d) above, since lending terms has been modified based on an international agreement under this Moratorium to offer a grace period in order to support reconstruction and recovery of affected countries, and is therefore irrelevant to their debt-repayment ability.

(h) As JBIC’s debtors mainly require long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC provides commitment lines under which it lends necessary funds up to a predetermined amount, which is within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2007 and 2006 are ¥3,656,740 million ($30,976 million) and ¥3,667,762 million respectively.

(i) With respect to claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt borrowers and Substantially bankrupt borrowers”), the residual booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees in written-off against the respective claims. There were no corresponding amounts as of March 31, 2007 and 2006.

6. Miscellaneous assets

Miscellaneous assets as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions ofyen)		March 31, 2007 (In millions of U. S. dollars)
Prepaid expenses	¥	493	¥	512	$	4
Accrued income (a)		61,599		68,427		522
Other (b)		819		1,935		7
	¥	62,913	¥	70,876	$	533

(Notes)

(a) “Accrued income” includes ¥61,391 million ($520 million) and ¥67,903 million of accrued interest on loans and other as of March 31, 2007 and 2006, respectively.

(b) “Other” includes ¥0 million ($0 million) of suspense payments and other as of March 31, 2007 and ¥52 million of suspense payments and other as of March 31, 2006.

7. Fixed assets (Premises and equipment)

Fixed assets (Premises and equipment) as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Tangible fixed assets
Land	¥	2,994	¥	2,994	¥	25
Buildings		6,985		7,271		59
Equipment		1,250		1,213		11
Construction in progress		27		221		0
Total	¥	11,258	¥	11,701	$	95
Less-accumulated depreciation		4,655		5,048		39
Net book value	¥	6,603	¥	6,653	$	56
Intangible fixed assets
Software	¥	2,179	¥	2,011	$	18
Guarantee deposit		—		318		—
Other		0		0		0
Total	¥	2,179	¥	2,329	$	18
Less-accumulated depreciation		845		488		7
Net book value	¥	1,334	¥	1,841	$	11
8. Deferred charges on bonds and notes
Deferred charges on bonds and notes as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Deferred discounts on bonds and notes	¥	—	¥	3	$	—
Total	¥	—	¥	3	$	—
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2007 and 2006 were as follows:
	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
General allowance for possible loan losses	¥	48,869	¥	45,518	¥	414
Specific allowance for possible loan losses		54,028		79,638		458
Allowance for possible losses on specific overseas loans		—		—		—
	¥	102,897	¥	125,156	$	872

10. Bonds and notes

Bonds and notes as of March 31, 2007 and 2006 were as follows:

Description of bonds and notes	Date of issuance	Currency and amounts March 31, 2007 (In millions)		Interest rate (%)	Maturity date	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Overseas Economic Cooperation Fund Bonds guaranteed by Japanese govt. 9	November 1996	JPY	—	2.9	November 2006	¥	—	$	10,000	¥	—
						¥	—	¥	10,000	$	—

Scheduled redemptions of bonds and notes for each of the next five years as of March 31, 2007 are as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	—	$	—
2008		—		—
2009		—		—
2010		—		—
2011		—		—

11. Borrowings

Borrowings as of March 31, 2007 and 2006 were as follows:

	Average interest rate		Due date of repayment	March 31, 2007 (In millions)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Long-term borrowings
Borrowings from the Government Fund for Fiscal Investment and Loan Program	1.79	}	March 2008- October 2021	¥	3,687,708	¥	3,978,612	$	31,239
Borrowings from the Government Post Office Life Insurance Fund	1.85				27,095		41,608		229
				¥	3,714,803	¥	4,020,220	$	31,468

Long-term borrowings with maturities for the next five years as of March 31, 2007 were as follows:

	In millions of yen		In millions of U.S. dollars
Fiscal year 2007	¥	384,366	$	3,256
2008		413,141		3,500
2009		430,199		3,644
2010		420,196		3,559
2011		373,762		3,166

12. Miscellaneous liabilities

Miscellaneous liabilities as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Accrued expenses (a)	¥	13,991	¥	16,113	$	119
Other (b)		113		1,031		1
	¥	14,105	¥	17,145	$	120

(Notes)

(a) “Accrued expenses” includes ¥13,633 million ($115 million) of accrued interest on borrowings and other as of March 31, 2007 (March 31, 2006: ¥15,938 million, and ¥8 million of accrued interest on bonds and notes).

(b) “Other” includes ¥113 million ($1 million) of suspense receipts as of March 31, 2007 (March 31, 2006: ¥1,031 million).

13. Employee retirement benefits

JBIC has a defined benefit pension plan comprising of a welfare pension fund plan and lump-sum severance indemnity plan.

(a) The funded status of the pension plans

Disposition			March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U. S. dollars)
Projected benefit obligation	(A)		¥	(8,898)	¥	(8,824)	$	(75)
Fair value of plans’ assets	(B)			2,750		2,564		23
Unfunded pension obligation	(C) =	(A) + (B)		(6,148)		(6,259)		(52)
Unrecognized net obligation at transition	(D)			—		—		—
Unrecognized net actuarial gains/losses	(E)			—		—		—
Unrecognized prior service cost	(F)			—		—		—
Net amount recognized on the balance sheet	(G) =	(C)+(D)+(E)+(F)		(6,148)		(6,259)		(52)
Prepaid pension cost	(H)			—		—		—
Allowance for employee retirement benefits	(G)-	(H)	¥	(6,148)	¥	(6,259)	$	(52)

(Note) The projected benefit obligation above includes a portion in which the pension fund acts for the government welfare program.

(b) Component of pension cost

Disposition	March 31, 2007 (In millions of yen)			March 31, 2006 (In million of yen)			March 31, 2007 (In millions of U. S. dollars)
Service cost	¥	335		¥	357		$	3
Interest cost		175			173			1
Expected return on plans’ assets		(38	)		(32	)		(0	)
Amortization of prior service cost		—			—			—
Amortization of net actuarial gains/losses		(14	)		(345	)		(0	)
Amortization of net obligation at transition		—			—			—
Other costs		—			—			—
Net pension cost	¥	487		¥	152		$	4

(c) Principal assumptions made

	March 31, 2007		March 31, 2006
Discount rate	2.0	%	2.0	%
Expected rate of return on plan assets	1.5	%	1.5	%
Method of attributing the projected benefits to periods of services	Straight-line basis		Straight-line basis
Amortization period of prior service costs	—		—
Amortization period of actuarial gains/losses	Gains/losses are charged to net income for the year		Gains/losses are charged to net income for the year
Amortization period of net obligation at transition	—		—

14. Assets pledged as collateral

There were no assets pledged as collateral as of March 31, 2007 and 2006.

15. Grant from general account

In accordance with the “Changes of the Debt Relief Method” announced by the Japanese government on December 10, 2002, JBIC reported an extraordinary loss (“ODA-loan related losses”) for the year ended March 31, 2003. Under the policy to maintain the financial soundness of JBIC, the government provided JBIC with a grant totaling ¥30 billion ($254 million) corresponding to “ODA-loan related losses” out of its general account for the fiscal year ended March 31, 2007 and 2006 respectively.

16. Reserve

Pursuant to Article 44 of the JBIC Law, the reserve attributable to the Overseas Economic Cooperation Account is provided from net earnings on the Overseas Economic Cooperation Account.

17. Lease transactions

Lease transactions in the fiscal year ended March 31, 2007 and 2006 were as follows. There are no impairment losses for the leased assets:

(a) Finance lease transactions, excluding leases that ownership of the property are deemed to be substantially transferred to the lessee:

• Acquisition cost, accumulated depreciation and net balance of leased property as of March 31, 2007 and 2006 were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions ofyen)		March 31, 2007 (In millions of U.S. dollars)
Acquisition cost
Equipment	¥	250	¥	237	$	2
Other		208		192		2
Total	¥	458	¥	429	$	4
Accumulated depreciation
Equipment		180		120		2
Other		135		96		1
Total	¥	316	¥	216	$	3
Net balance
Equipment		69		117		0
Other		72		96		1
Total	¥	142	¥	213	$	1

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	90	¥	102	$	1
Due after 1 year		55		115		0
Total	¥	145	¥	218	$	1

• Lease payment, depreciation expense and interest expense for the fiscal year ended March 31, 2007 and 2006 are as follows:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Lease payment	¥	108	¥	107	$	1
Depreciation expense		103		102		1
Interest expense		3		5		0

• Depreciation expense is calculated using the straight-line method over the useful economic life of the respective leased assets with zero residual value.

• The difference between total lease payments and the acquisition cost of leased assets is debited to effective interest expense, and is allocated to each fiscal year using the interest method.

(b) Operating lease transactions:

• Future lease payment obligations as of March 31, 2007 and 2006 are summarized below:

	March 31, 2007 (In millions of yen)		March 31, 2006 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Due within 1 year	¥	1	¥	2	$	0
Due after 1 year		—		0		—
Total	¥	1	¥	3	$	0

18. Derivative transactions

There were no derivative transactions in the fiscal year ended March 31, 2007 and 2006.

19. Market value of securities

Notes to market value of securities as March 31, 2007 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

	March 31, 2007 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Sales amount	¥	5,000	$	42
Gains on sales		—		—
Losses on sales		—		—

(f) Held-to maturity debt securities and available-for-sale securities whose market value are not readily determinable were as follows:

	March 31, 2007 (In millions of yen)		March 31, 2007 (In millions of U.S. dollars)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—	$	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		107,181		908
Unlisted foreign equities		814		7
Other unlisted Japanese securities		—		—
Other unlisted foreign securities		1,279		11
Total	¥	109,275	$	926

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable

Notes to market value of securities as March 31, 2006 are as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

Not applicable

(c) Available-for-sale securities with market value

Not applicable

(d) Held-to-maturity debt securities sold

Not applicable

(e) Available-for-sale securities sold

	March 31, 2006 (In millions of yen)		March 31, 2006 (In millions of U.S. dollars)
Sales amount	¥	128	$	1
Gains on sales		53		0
Losses on sales		—		—

(f) Held-to maturity debt securities and available-for-sale securities whose market value is not readily determinable are as follows:

	March 31, 2006 (In millions of yen)
Held-to-maturity debt securities
Unlisted foreign securities	¥	—
Available-for-sale securities
Unlisted Japanese equities other than over-the-counter		115,804
Unlisted foreign equities		2,053
Other unlisted Japanese securities		—
Other unlisted foreign securities		1,277
Total	¥	119,135

(g) Change in classification of securities

Not applicable

(h) Redemption schedule of available-for-sale securities with maturity and held-to maturity debt securities

Not applicable

(i) Equity securities of subsidiaries and affiliates with market value

Not applicable

(j) Money held in trust

Not applicable

(k) Net unrealized gain (loss) on available-for-sale securities

Not applicable