Demand to prop up market rejected

The government will not use public funds to prop up the stock market, as the ruling coalition parties have demanded, because it would not produce the intended effects immediately, government officials said Tuesday.

The government’s stance was confirmed at a meeting between Prime Minister Yoshiro Mori and Nobutaka Machimura, a former education minister currently serving as the prime minister’s aide, the officials said.

On Monday, the three coalition parties — the Liberal Democratic Party, New Komeito and the New Conservative Party — submitted a joint position paper to the government following a 6.98 percent plunge in the key Nikkei average of 225 major stocks.

In the position paper, the three parties demanded that the government use 1 trillion yen in public funds to buy shares and bring forward the implementation of public works projects earmarked in the fiscal 2000 state budget.

The parties also said the government should use the 500 billion yen public works reserve fund at an early date and take appropriate steps to stop rapid fluctuations in the yen.

Government leaders concluded that the use of public money, such as postal savings funds, would be ineffective, citing the adoption of a similar step in 1998.

Finance Minister Kiichi Miyazawa dismissed the proposal at Tuesday’s session of the Finance Committee in the House of Representatives.

Kunihiro Tsuzuki, head of the Management and Coordination Agency, told reporters that the government should not get involved in the market.

With regard to the proposal to use the public works reserve funds, government leaders concluded that local governments are already too busy with public works projects.

They agreed, however, to consider front-loading public works projects if stock prices continue to fall.