Introduction to Kobe City Government Bonds
Fiscal Policies of Kobe City
October 2023

Contents

1. Overview
2. Fiscal Profile
3. Kobe City Local Government Bonds
4. Appendix

2

Contents

1. Overview
2. Fiscal Profile
3. Kobe City Local Government Bonds
4. Appendix

3

Overview of Kobe City
Area

Universities / Junior Colleges

557.05 k㎡(As of April 1, 2023)

9th place in21

designatedcities(FY2022)

Population
1,501,678(As of April 1, 2022)(As of April 1, 2023)

Approx. 65,890

7th place indesignatedcities(FY2022)(JPY, FY2018)

5th place indesignatedcitiesMuseums

7th place in46

designatedcities

GDP
6.66 trillion

designatedcitiesUniv. / Junior College Students

Households
742,776

6th place in(As of FY2020)

3rd place indesignatedcitiesCity Park Area per Person
7th place indesignatedcities17.45 ㎡
(As of FY2020)

1st place indesignatedcities Kobe is one of the major designated cities in Japan 7th largest GDP scale among the designated cities

in Japan (JPY 6.66 tn in FY2018)
 All types of transportation (air, land and water) areavailable and interlinked

4Location & Access Area Population

Port of Kobe:
3rd largest volume of container throughput in Japan

557.05 k㎡
1,501,678 (As of April 2023)

 The leading shipping lines call Pot of Kobeon the direct routes to the world’s major
ports.
 It handled the largest container throughput
in FY2018 over the history of Kobe City.

 Households 742,776 (As of April 2023)

Container Throughput (TEU)(mn)
Mt. Rokko





(mn)

4

The “Waterfront Area” boasts
outstanding access with both Kobe
Airport and the Port of Kobe, and“Inland Area” provides nature-rich
suburbs with offices and residential
areas close to each other

INLAND AREA

Bullet train to Fukuoka

2.87 2.65

2.82

2.89

FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

WATERFRONT
AREA
Kobe Port

Kobe Airport

Number of Passengers at Kobe Airport
3.23

Shin-Kobe St.

2.94

Sannomiya St.

Combination of two types ofbusiness areas in Kobe meets theneeds of any individual or company
looking for investment opportunities

3.05

3
2

Bullet train to Osaka

4
3
2
1
0

Railways to Major Cities: (Bullet Train)
Fukuoka

Hiroshima

2hr15min1hr15min

KOBE

NagoyaTokyo

1hr5min2hr50min

Kobe Airport

1 hr from Haneda Airport
Connected to 12 major regional airports in Japan
18 min from the city center by train (Port liner)
30 min from Kansai International Airport by train

Hyogo

1.72
1.19

1

Hiroshima

Kobe

Tokyo
NagoyaFukuokaOsaka

0

FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

5

Industrial Structure of Kobe City Diversified Product Shipment – Food (highest amount among the designated cities), General Purpose Machinery (highest amountamong the designated cities) and transportation equipment on top, consisting of approximately 50% of the total product shipment
 More than 200 global companies have headquarters and/or business establishments in Kobe
 Total value added is JPY 1.2 tn, the 2rd largest among the designated cities in Japan

Breakdown of Product Shipment

1,200,000
Others
6.3%

Food
20.8%

1,000,000
800,000
600,000

Kumamoto

Fukuoka

Sendai

Sapporo

Chiba

SaitamaOkayama

Sagamihara

Niigata

Kita-kyushu

Hamamatsu

Sakai

Shizuoka

0

Hiroshima

200,000
Kawasaki

Chemicals
11.7%

GeneralPurposeMachinery
12.8%

400,000

Kyoto

Electricity
9.5%

Transportation
Equipment
14.4%

Yokohama

3.42 tn (JPY)in FY2020
100%

NagoyaIron/Steel/
Copper6.1%

1,400,000

Kobe

Plastics
2.4%
Production
3.1%
Information/
Communication
3.7%
Beverages
5.8%

(mn)

Osaka

Metals
1.9%

Business
Oriented
Machinery
1.6%

Comparison of Total Value Added* among Designated Cities*Value newly added in the production activities of offices(calculated by deducting raw material cost, etc. from production value)

6Tourism in Kobe City
International Conference Venues in Japan（FY2020）

Number of Tourists in Kobe
(mn)

0.0

0

Kitano

9

9

6

4

3

2

2

2

1
Chiba

0

10 9

Okayama10

Kobe Beef

15 13

Hiroshima

1.0

Hot Spring in Arima

23

20

10
FY
FY
FY
FY
FY
FY
FY
FY
FY
2014 2015 2016 2017 2018 2019 2020 2021 2022

26

30

Sapporo15.63 13.38

2.0

Nara

20

3.0

Tsukuba

21.61

3rd most popularvenue in Japan40

Kita-kyushu

2.5

50

Osaka

30

2.6

4.0

Nagoya35.42

Yokohama

40

5.0

63

Sendai

3.7

60

Senri

50

70

Fukuoka

4.8

6.0

Kobe

Tourists stayed in Kobe

Kyoto

Total Tourists

Tokyo

60

Waterfront Area

7

Contents

1. Overview
2. Fiscal Profile
3. Kobe City Local Government Bonds
4. Appendix

8

Trend of Revenue Accounts
 Kobe has stable city tax revenue which is around JPY 300 bn every fiscal year Total revenue of general account has been around JPY 800 bn per year and the ratio of city bond revenue remains around 10%
 Maintaining real surplus for the past 24 consecutive years; JPY 8.4 bn increase in city tax revenue in FY2022(bn, JPY)

1,800

45.0%

1,600

40.0%
464

1,400
1,200

33.3% 35.0%

1,000

600
400
200

403

25.0%

387

607
800

30.0%

446

182
344 352327

328 300 280

180

106

203 230

20.0%

94 92
207 175
221 205
243 248 245
193 211 168 163 180 184
232 229 215
15.0%
90
101 81
80
344
55
82
72
60
70
242 223
73 56 52
80 65 82 63 67 69 70
242 199
126
39 41 40308
159
148 127 104 102 93
104 110 96 88 91 101 136 126 120 116 130 128 131 130 147 144
10.0%
108
75 72 87 83
103 99 114 128 122 125 119 120 121 98 81 83 81
9.7%
79 74 68 63 56 58 55 69 68
60 68 111
5.0%
274 243 276 293 289 286 276 270 264 252 251 257 263 276 278 273 267 270 267 271 275 272 272 273 301 309 305 306 314
141

0

0.0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
City tax
City bonds
City Bond as of % of Total (Right axis)

Local Allocation Tax
Other

National Treasury Disbursement
City Tax as % of Total (Right axis)

9Trend of Expenditure Accounts
 Mandatory expenses account for more than half of all expenditure due to increase in social security related expenses
 Investment expenses have been managed under 10% of the total general account expenditure since its recovery
from the Great Hanshin Earthquake(bn, JPY)

1,800

70.0%

1,600

60.0%
55.0%

1,400

50.0%

781

1,200

462

40.0%

1,000
324
800

522 510 378

600
400
200

321 352357

222

313 298

263 197 159 132

303 279 272
122 93357 339 367 383 368 399 405 414 403 416

76

272
84

267 270 265

315 273 249 293

59

67

62

62

71

63

47

233 229 225 226
69

64

66

217 206

219

64

85

69

403

330 326

95

89

93

66
486 489 500 498 505 513

432 407 382 380 378 395 404 405 396 383 388 410 410

0

30.0%

20.0%

10.0%
10.0%
0.0%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Mandatory Expenses (Personnel, Social security, Debt)

Investment Expenses

OthersMandatory Expenses as % of Total (right axis)

Investment Expenses as % of Total (right axis)

10Trend of Outstanding Volume of Debt
 Outstanding volume of debt is on the decrease, which shows sound fiscal status of Kobe(bn, JPY)

2,500
2,083
2,079
2,023
2,033
1,978
1,936
1,957
1,873
1,779

2,000

1,645
1,395
1,326

1,500

1,047

1,269
1,190
1,145
1,130
1,109
1,103
1,089
1,213
1,147
1,182
1,144
1,159
1,122
1,096
1,138
1,094

1,000

500
FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
City bond11

Liquidity: Status of Sinking Fund
 Kobe has accumulated its sinking fund under the prescribed rule and the reserves reached to around JPY 373 bn
 Kobe has recorded continuous surplus in its primary balance since FY1999

Sinking Fund Reserves

Surplus in Primary Balance(bn, JPY)

400(ｍn, JPY)

373

350

3,000

2,500

300
2,000

250
200

1,500
1,126

150

1,000

100
500

50
0

0
FY FY FY FY FY FY FY FY FY FY FY2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

FY FY FY FY FY FY FY FY FY FY FY2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

12

Contents

1. Overview
2. Fiscal Profile
3. Kobe City Local Government Bonds
4. Appendix

13Summary of Kobe City’s Bond The same rating as Japanese government bond. AA+ by R&I is the highest rating among Japanese municipalities
 Format: Japanese domestic municipal bond
 BIS Risk Weight: 0％ for domestic investors
 Maturity: 5yr/10yr/20yr/30yr

Examples of Bond Proceeds

Ratings by R&I
AAA Proceeds of municipal bonds are basicallyused for infrastructure investments

N/A

AA＋

Japan (sovereign), Kobe City, Saitama Prefecture,
Shizuoka Prefecture, Aichi Prefecture, Chiba City
Tochigi Prefecture, Okayama Prefecture,
Miyagi Prefecture

AA

Fukui Prefecture, Nara Prefecture,
Tokushima Prefecture, Saga Prefecture Some proceeds are allocated to develop
infrastructures for cleaner energy creation anddisaster prevention, etc.

Improvement of Road
Environment

Transition of the Rating of Kobe City by R&I

Minato-island Clean Center

UpgradedJanuary
January 2007
2007

AA

April 2015

AA＋
(equivalent to JGB)

Since
April 2016

AA＋
(equivalent to JGB)

14

Issuance Plan and Historical Volume
 Kobe has issued 5yr, 10yr, 20yr and 30yr bonds in the domestic capital market every fiscal year
 Kobe has been the leading issuer of non-JPY bonds in Japan; issued the first non-JPY municipal bond in 1899 andthe first non-JPY city bond for onshore investors in September 2019

History of Foreign Currency Bond Issuance of Kobe

Historical Public Issuance Volume since FY 2008
(bn, JPY)

Jul. 2020/USD210M/5yr
Aug. 2020/USD80M/3yr
Add different tenor of non-JPY
city bond in domestic format

140

8.9

120
Sep. 2019/USD80M/10yr
First non-JPY city bondIn domestic format

100

12

80

60

40

20

0

10
15

10
20

10
28

10
10

13

20

30

20

40
25

25

22

10

8.4
25

32

20

30

35

Apr. 2021/USD80M/5yr
Issue continuously
non-JPY city bondIn domestic format

45
45

30

19

10

10

20
23

20

20

12

25

30
30

20

15

8.5

21.9

10
30

30

25
20

30

35

10

40

85
50

60

10

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
5yr

10yr

20yr

30yr

10yr(USD)

3yr(USD)

5yr(USD)

Issue Year

Issue Volume

Currency

2021
2020
2019
1995
1994
1993
1992
1991
1990
1989
1988
1987
1987
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1972
1971
1969
1968
1899

80M
290M
80M
230M
200M
240M
210M
240M
150M
150M
150M
100M
100M
100M
120M
100M
100M
100M
150M
100M
100M
100M
50M
100M
100M
100M
100M
25K

USD
USD
USD
USD
GBP
USD
USD
CHF
USD
USD
CHF
CHF
CHF
CHF
DEM
CHF
CHF
DEM
DEM
DEM
DEM
DEM
DEM
DEM
DEM
DEM
DEM
GBP

First non-JPY citybond
In domestic format

First non-JPY
municipal bond in
Japan

15

Redemption Schedule Kobe is scheduled to repay around JPY 60 bn every fiscal year until FY2024 as of FY2022

Kobe’s Redemption Schedule(bn, JPY)

150

120

90

60

30

0

FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051

16

Kobe’s New Issues from FY2016
Pricing Date

IssuerIssue Date

Tenor

Currency

Amount(JPY bn)

R&I
RatingMaturity

Coupon Rate
(%)

Offer
Price

JGB Spread

10-Nov-22
07-Oct-22
25-Aug-22
27-Oct-21
01-Sep-21
02-Apr-21
02-Apr-21
01-Apr-21
02-Oct-20
27-Aug-20
05-Aug-20
31-Jul-20
15-May-20
14-May-20
02-Oct-19
04-Sep-19
04-Sep-19
28-Aug-19
25-Apr-19
3-Apr-19
3-Apr-19
5-Dec-18
3-Oct-18
6-Sep-18
4-Sep-18
6-Jun-18
9-Mar-18
4-Apr-18
1-Dec-17
6-Oct-17
4-Oct-17
1-Sep-17
2-Aug-17
12-May-17
5-Apr-17
13-Jan-177-Oct-16
9-Sep-16
15-Jul-16
3-Jun-16
8-Apr-16
15-Jan-16

City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe
City of Kobe

21-Nov-22
21-Oct-22
5-Sep-22
19-Nov-21
10-Sep-21
13-Apr-21
13-Apr-21
14-Apr-21
13-Oct-20
07-Sep-20
17-Aug-20
12-Aug-20
26-May-20
26-May-20
25-Oct-19
20-Sep-19
20-Sep-19
09-Sep-19
14-May-19
12-Apr-19
12-Apr-19
20-Dec-18
15-Oct-18
20-Sep-18
20-Sep-18
20-Jun-18
18-May-18
13-Apr-18
20-Dec-17
18-Oct-17
16-Oct-17
20-Sep-17
14-Aug-17
23-May-17
14-Apr-17
24-Jan-17
19-Oct-16
21-Sep-16
27-Jul-16
14-Jun-16
19-Apr-16
26-Jan-16

5
20
5
5
30
30
5
5
5
30
3
5
5
30
5
30
20
10
30
10
5
30
5
10
20
5
30
10
20
5
10
20
10
30
5
20
5
10
30
5
10
20

JPY
JPY
JPY
JPY
JPY
JPY
JPY
USD
JPY
JPY
USD
USD
JPY
JPY
JPY
JPY
JPY
USD
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY
JPY

30
18.8
30
50
10
25
35
80M(USD)
15
1080M(USD)
210M(USD)
35
35
20
30
10
80M(USD)
15
10
20
10
20
15
10
15
15
10
10
10
10
20
10
12
20
10
10
15
15
20
15
10

AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+
AA+

19-Nov-27
21-Oct-42
3-Sep-27
20-Nov-26
20-Jun-51
20-Mar-51
13-Apr-26
14-Apr-26
10-Oct-25
20-Jun-50
17-Aug-23
12-Aug-25
26-May-25
18-Mar-50
25-Oct-24
18-Jun-49
20-Sep-39
09-Sep-29
19-Mar-49
12-Apr-29
12-Apr-24
18-Sep-48
13-Oct-23
20-Sep-28
17-Sep-38
20-Jun-23
19-Mar-48
13-Apr-28
18-Dec-37
18-Oct-22
15-Oct-27
18-Sep-37
13-Aug-27
20-Mar-47
14-Apr-22
23-Jan-37
19-Oct-21
18-Sep-26
20-Jun-46
14-Jun-21
17-Apr-26
25-Jan-36

0.200
1.063
0.120
0.001
0.713
0.765
0.010
1.319
0.020
0.674
0.582
0.765
0.020
0.517
0.001
0.300
0.200
1.985
0.645
0.095
0.010
0.881
0.02
0.254
0.668
0.03
0.845
0.185
0.365
0.020
0.230
0.597
0.220
0.950
0.010
0.645
0.001
0.105
0.283
0.005
0.080
1.007

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100.002
100
100
100
100
100

JGB(#348)+13.0bp
JGB(#181)+9.0bp
JGB(#347)+9.5bp
JGB(#344)+6.5bp
JGB(#71)+6.0bp
JGB(#69)+7.0bp
JGB(#342)+9.0bp
MS+26.0bp
JGB(#340)+13.0bp
JGB(#67)+7.0bp
MS+40.0bp
MS+50.0bp
JGB(#338)+14.0bp
JGB(#66)+7.0bp
JGB(#335)+32.0bp
JGB(#63)+18.5bp
JGB(#169)+16.5bp
MS+60.0bp
JGB(#62)+9.0bp
JGB(#354)+15.5bp
JGB(#333)+18.5bp
JGB(#60)+10.0bp
JGB(#331)+8.0bp
JGB(#351)+14.5bp
JGB(#165)+5.0bp
JGB(#329)+13.0bp
JGB(#58)+10.0bp
JGB(#350)+15.5bp
JGB(#100)+30.0bp
JGB(#325)+11.0bp
JGB(#348)+16.5bp
JGB(#161)+5.0bp
JGB(#347)+14.5bp
JGB(#54)+11.0bp
JGB(#322)+12.0bp
JGB(#159)+5.0bp
JGB(#318)+22.0bp
JGB(#344)+13.0bp
JGB(#51)+12.0bp
JGB(#316)+24.0bp
JGB(#342)+15.0bp
JGB(#155)+3.5bp

Non-JPY city bondIn domestic format

First non-JPY city bondIn domestic format

17

Contents

1. Overview
2. Fiscal Profile
3. Kobe City Local Government Bonds
4. Appendix

18

“Kobe SDGs Bond” and “Ko be 2025 Vision”
Kobe SDGs Bond --- Aiming to Achieve SDGs by Realizing “Kobe 2025 Vision”
Overview of Kobe SDGs BondUse of proceeds of Municipal bonds are regulated
by Central Government in Japan

Capital Market
Issuance ofKobe SDGs Bond
Strongmomentum for
ESG investment

Kobe shares the direction andits policy with stakeholders
to obtain sympathy for
Kobe SDGs BondJapanese municipalities arein principle only able toissue bonds for financepurposes as stipulated in
Article 5 of the Local
Finance Law

Kobe sets concrete goals and
KPIs in “Kobe 2025 Vision” butdoes not limit the UoP of its
bonds to specific projects

Concept of “Kobe SDGs Bond”“Kobe 2025 Vision”- Kobe’s Mid-term Policy (Obtained SPO from R&I)
Key Goal 1
Enhancing economic growthby creating attractive jobs
and industry-academia
collaboration

Key Goal 6
Creating a sustainable city
spaces and infrastructure

Kobe implements
various projects
based onKey Goal 5

Key Goal 3

Realizing a safe, healthy,
and carefree way of life

Creating diverse cultures,arts, and attractions

Key Goals

Usual ESG Bonds

Kobe SDGs Bond

ICMA

GBP, SBP, etc.

Not Based

UoP

LimitedGeneral Purpose

Depending on Tenors of
Eligible Assets
Projects Base
(Eligible Assets)
Provided to Issuance
Framework

Depending on Market
Conditions
Project Base
(Issuer’s Projects)
Provided to Issuers Midterm Policy Plan

Tenor
Reporting
SPO
Objective

Contribution to the achievement of ESG/SDGs

Kobe sets “7 Key Goals” in Kobe 2025 Vision

 “Kobe SDGs Bond” is the name of Kobe’s city bonds. Characteristics and credit risks are the same as those of other city bonds
 “Kobe 2025 Vision,” which is Kobe’s mid-term policy plan, sets Kobe’s key goals and KPIs to realize SDGs
 R&I, a major rating agency in Japan, provides the SPO for “Kobe 2025 Vision” that the plan contributes to the realization of SDGs
 Kobe does not limit the use of proceeds of “Kobe SDGs Bond” further than the Local Finance Law regulating Japanesemunicipality's use of proceeds, to ensure Kobe’s smooth fiscal and project management

19

“Kobe SDGs Bond” Framework
 The framework of “Kobe SDGs Bond” consists of below four components

I. Use of Proceeds

II. Process for ProjectEvaluation and
Selection• Proceeds will be used to the projects that are eligible to be financed by municipal bonds upon Article 5 and other provisions of
the Local Finance Law— Kobe will not additionally limit the use of proceeds unless the projects are aligned to Article 5 and other provisions of the
Local Finance Law• Japanese Local Governments (JLGs) must consult with the Minister of Internal Affairs and Communications (in the case ofprefectures and government designated cities) before its debt issuance, as the use of proceeds are regulated• JLGs are allowed to issue municipal bonds based on their budgets and the regulations, such as the Local Finance Law. The
budget plan needs to be resolved in Kobe City council before each fiscal year starts• Kobe will evaluate the feasibility of the projects and its sustainability during the process of budget planning— Kobe will focus its allocation of budget to projects listed in the “Kobe 2025 Vision”• With these processes, the appropriateness in project evaluation/selection will be secured in terms of governance as well

III. Management ofProceeds• Net proceeds will be managed with clearly specified use of proceeds, such as managing them according to Kobe’s accounting
rules• In general, net proceeds are to be used to finance eligible projects within the same fiscal year
• The level of achievement will be reviewed through: numerical targets, activity of each project, and the KPI (key performanceindicator) set for each key goal (pillar of measures) of “Kobe 2025 Vision” every fiscal year

IV.Reporting— Kobe will also verify the impacts and challenges to be improved based on various data such as objective indicators
showing the quality of the town and the quality of living and SDGs local indicators— “Kobe 2025 Vision” will also be reviewed and flexibly revised in case of a major change in the external environment suchas the socio-economic situation• External experts will review the degree of achievement and report to the city council for further promotion of “Kobe 2025
Vision”

20

“Kobe 2025 Vision”
 “Kobe 2025 Vision” is a five-year implementation plan outlining the direction of Kobe’s urban vision and urban development
 Kobe City will operate business in accordance with “Kobe 2025 Vision” and strive to achieve the 7 key goals set forth in the vision

Overall Structure of “Kobe 2025 Vision”
6 Key Concepts

Theme
Nestled between the mountains
and the sea

Kobe: Contributing globallyby cultivating locally

Crating new values and styles byrefining Kobe’s strengths, which are a
combination of rich nature,
culture anddiverse values

Facing an era of declining population,
we will shift to a Virtuous cycle byimproving the Quality of Kobe’s cityand lifestyle andpromoting themature city

Living, working, learning and enjoying in Kobe andRealizing a city where all people Involved
experience happinessRealizing a multicultural society withthe participation of diverse citizens,
including foreign citizens by ensuring
perspectives on diversity and genderequality and creating an environment
which females
play an active role

Promoting wisdom and spirit ofcitizens who have recovered from thepast natural disaster, we will prepare
for all kinds of crises and realize asafe and secure city where
no one is left behind and where
people are valued

Becoming a sustainable city by achieving the SDGs,
including the enrichment of citizens throughaccelerating implementation of technology anddigitalization, improving convenience, recoveringand growing economic activities, and contributing
to the environment

7 Key Goals⓵Enhancing economic
growth by creating
attractive jobs andindustry-academia
collaboration⓶Providing pregnancy,⑦Revitalizing local
childbirth and childcare④Building a safe social⑤Realizing a safe,⑥Creating a sustainablecommunities through the⓷Creating diverse culture,
support and enhancing
system in light of disasters healthy and carefree way
city spaces andarts and attractions
participation of diverse
distinctive educational
and infectious diseasesof lifeinfrastructure
citizens
environment

Formulating numerical targets, measures, projects and KPI for projects based on the 7 key goals

Taking into consideration
The second phase of the national government’s“Comprehensive Strategy for the Creation of Cities,
Human Resources and Works”[Cross-sectional Goal 1] Promoting the activities of diverse human resources[Cross-sectional Goal 2] Being powered by the new age trend（Promoting Society5.0, Realizing regional development driven by SDGs, etc.）[Basic Goal 1][Basic Goal 2]
Creating a profitable community and making it Building connections with local communities
possible to work with peace of mind
and creating a new flow of people to local
areas[Basic Goal 3]
Fulfilling hopes for marriage, childbirth andchild rearing[Basic Goal 4]
Creating an attractive communities where
people can live in peace21

Pr o gr e s s Ma na g e m en t o f “ Ko be 2 02 5 Vi s io n”
 Kobe City conducts the progress management for the realization of “Kobe 2025 Vision”
 The level of achievement is annually checked through: numerical targets set for each key goal, the status of each measure andthe level of achievement of KPIs
 Kobe City will conduct annual evaluation by external experts and report the results to the City Council

Publishing the Progress of “Kobe 2025 Vision” Annually Reporting the status of each measure, including KPIs

2021
2022

 Publishing the results of evaluation by external
experts in the documents
 The results will be reported to the City Council
and will be published on city's website

Conducting annual evaluation of the progress
management of “Kobe 2025 Vision”
by external experts

2023
2024
2025

Way of Publishing the Progress

Overall
Evaluation

Evaluation ofeffectiveness foreach measureand improvement

To be reported to
the City Council
and published on
the city’s website

Realization of the ideal citywhich Kobe City is aiming to be
22

Fiscal Position of Kobe All four indicators are performing better than the nationally established standards

National Standards
Four Indicators*

Description

FY2022

Real Deficit Ratio

Amount of general account deficit
as a proportion of fiscal scale

Consolidated Real
Deficit Ratio

Amount of all account deficits as aproportion of fiscal scale

Early Warning
Limit

Reconstruction
Limit(Surplus)

11.25%

20.0%(Surplus)

16.25%

30.0%

Real Debt Payment Public debt expenses as a
Ratio
proportion of fiscal scale

4.8%

25.0%

35.0%

Future Burden
Ratio

60.9%

400.0%－

Prefectural bond balance as aproportion of fiscal scale*If the above indicators except the future burden ratio exceed the national standards, the national approval is required to issue bonds

23

Japanese Local Government Bonds
 Japanese local government bonds have a risk weight of zero as a result of powerful national fiscal backing,a tax system designed to prevent failure and other measures as described below

1．Local Issue Tax System When determining budgets for each fiscal year, the national government sets forth an estimate of revenues andexpenditures for all local governments, and guarantees revenue shortfalls As part of this system, the national government provides backing for the redemption of the principal and interest of local
government bonds, thereby strengthening the repayment capacity of local government bonds by local governments
2．Bond Issuance Approval System as an Early Correction Measure Local governments must discuss with the national government before issuing bonds, and receive confirmation that the
new bond issuance is reasonable and will not negatively affect the local governments' future ability to repay principal andinterest of local government bonds

Outline of Tax Exemption for Non-Residents
Tax Exemption for Non-Residents
 Starting in 2008, with the Article 5-2 Act on Special
Measures Concerning Taxation (Limited to the provisions
related to nonresidents and foreign corporations), theinterest gains on LGBs owned by non-resident or foreign
corporations which settled by the book-entry system are
exempted from withholding tax

Simplification of Tax Exemption Procedures
Non-residents/Non-domestic entities
Qualified foreign intermediary(including Clearstream, Euroclear)
Specified transfer institution (subcustodian)
Director of tax office with jurisdiction
over the specified transfer institution

24General Accounts: Revenue
Category / FY
[JPY, bn]

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

City Tax

243.3 276.1 292.9 289.1 286.3 275.6 269.7 264.2 251.7 250.6 256.8 262.6 275.9 277.9 273.1 267.1 269.8 266.5 270.6 275.0 271.9 272.3 273.5 300.9 309.3 305.5 305.5 314.1

Individual
Citizen Tax

66.1 75.8 94.7 90.1 86.7 82.0 79.9 78.9 74.7 71.6 74.7 82.1 93.4 94.8 94.9 88.7 87.4 90.5 90.8 90.9 92.0 93.1 94.0 121.1 126.4 128.1 127.1 128.6

Corporate
Citizen Tax

26.9 36.8 31.7 27.8 24.2 22.4 22.0 20.8 20.2 23.4 27.3 32.7 31.1 30.7 25.3 24.8 27.2 27.1 28.3 29.7 27.9 25.9 25.1 25.4 26.2 21.3 21.6 22.8

Fixed Asset
Tax

105.5 117.1 119.2 124.2 127.2 123.5 122.7 120.7 115.6 113.8 114.2 108.0 110.4 111.5 112.4 112.6 113.1 107.8 108.9 110.6 109.5 110.3 111.6 111.5 113.3 113.2 113.0 117.3

Urban
Planning Tax

24.8 27.3 26.1 26.9 27.3 26.1 25.6 24.8 23.0 22.5 22.4 21.1 21.6 22.0 22.2 22.4 22.5 21.4 21.6 22.0 21.8 22.2 22.4 22.5 22.8 22.8 22.7 23.5

Others20.0 19.1 21.2 20.1 20.9 21.6 19.5 19.0 18.2 19.3 18.2 18.7 19.4 18.9 18.3 18.6 19.6 19.7 21.0 21.8 20.7 20.8 20.4 20.4 20.6 20.1 21.1 22.0

National Taxes
Allocated to
Local
Governments

68.2 110.7 103.2 98.5 114.0 128.0 122.5 125.3 119.3 120.1 121.2 97.9 81.1 82.5 80.9 78.6 73.7 67.9 62.7 55.9 57.7 54.6 68.8 68.4 74.7 72.3 87.2 82.9

Financial Index

0.83 0.78 0.74 0.72 0.72 0.71 0.68 0.67 0.66 0.65 0.64 0.66 0.69 0.72 0.73 0.73 0.73 0.74 0.76 0.76 0.79 0.80 0.80 0.80 0.79 0.79 0.80 0.77

City Bonds

606.5 326.7 140.8 101.1 80.5 55.1 60.3 69.7 73.4 56.1 51.8 39.1 40.9 40.3 72.0 80.2 64.6 82.2 63.3 67.4 69.0 70.2 82.3 80.3 90.2 106.1 94.5 91.6

Bonds for
Extraordinary
Fiscal
Measures8.3

18.8 33.6 24.1 18.5 16.7 15.1 14.2 22.0 42.3 43.5 42.1 42.7 42.9 41.3 41.5 49.6 49.0 41.7 45.4 44.1 29.7

Others

771.4 687.9 586.2 492.3 480.0 431.7 402.2 373.4 347.8 357.8 341.0 320.5 320.0 315.5 356.6 330.6 313.9 326.7 298.3 290.2 311.2 314.2 354.3 318.9 338.5 525.8 445.0 453.1

Revenue

1,689.4 1,401.4 1,123.1 981.0 960.8 890.4 854.7 832.6 792.2 784.6 770.8 720.1 717.9 716.2 782.6 756.5 722.0 743.3 694.9 688.5 709.8 711.3 778.9 768.5 812.7 1,009.7 932.2 941.7

25

General Accounts: Expenditures
Category / FY
[JPY, bn]

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Mandatory Costs

339.3 366.6 383.0 368.1 398.9 405.5 413.7 402.5 415.6 431.9 407.4 381.6 380.0 378.3 395.0 403.8 405.0 396.3 383.3 387.9 409.5 410.2 486.3 489.1 499.7 498.4 505.2 512.7

Personnel
Costs

157.0 154.0 157.7 155.4 162.3 153.4 156.6 139.3 134.8 132.5 130.2 133.5 131.4 125.8 127.0 122.1 120.1 116.6 110.4 111.7 121.7 119.7 190.0 189.0 190.0 187.1 186.5 185.2

Social Aid
Costs

94.5 87.8 92.3 96.8 104.7 98.1 105.6 113.4 121.6 130.6 131.9 132.7 136.2 139.6 146.9 171.9 178.4 179.7 180.2 185.3 195.1 199.1 205.3 208.6 217.7 221.4 226.7 229.0

Municipal
Bond Costs

87.8 124.8 133.0 115.9 131.9 154.0 151.5 149.8 159.2 168.8 145.3 115.4 112.4 112.9 121.1 109.8 106.5 100.0 92.7 90.9 92.7 91.4 91.0 91.5 92.0 89.9 92.0 98.5

Investment
Outlays522.2 510.4 378.4 263.2 197.3 158.5 132.3 121.7 92.6 76.0 84.1 58.9 62.0 61.9 67.0 71.3 62.9 46.5 69.2 63.6 65.9 66.1 69.3 64.4 85.2 95.1 88.6 92.8

Transferred Fund76.1 73.2 69.2 83.1 82.9 88.6 82.6 79.8 83.5 79.0 86.4 89.3 91.4 93.6 85.1 83.3 85.2 78.1 80.0 82.0 88.3 87.2 85.9 83.9 84.5 89.5 87.7 88.2

Equipment Costs,
etc.

704.6 388.6 254.8 238.0 269.4 224.3 214.9 223.3 195.3 192.6 185.6 177.4 178.4 171.0 229.7 189.6 163.5 215.0 153.4 146.9 136.9 138.9 131.5 122.0 134.3 313.7 242.0 238.1

Expenditures

1,642.2 1,338.8 1,085.4 952.4 948.5 876.9 843.5 827.3 787.0 779.5 763.5 707.2 711.8 704.8 776.8 748.0 716.6 735.9 685.9 680.4 700.6 702.4 773.0 759.4 803.7 996.7 923.5 931.7

Mandatory Cost
Ratio

20.7%27.4%35.3%38.6%42.1%46.2%49.0%48.7%52.8%55.4%53.4%54.0%53.4%53.7%50.9%54.0%56.5%53.8%55.9%57.0%58.4%58.3%62.9%64.5%62.2%50.0%54.7%55.0%

26

For Inquiries:
Public Loan Section, Finance Division, Administration and Finance Bureau,
City of Kobe
6-5-1 Kano-Cho, Chuo-Ku, Kobe

Kobe City IR Video: https://www.youtube.com/watch?v=ftCiyTWoc0U