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Prime Minister Keizo Obuchi instructed his Cabinet ministers Friday to step up efforts to ease the ongoing credit crunch surrounding small and medium-size enterprises.

During an informal Cabinet meeting, Obuchi told Finance Minister Kiichi Miyazawa as well as International Trade and Industry Minister Kaoru Yosano to draw up measures by next Friday, Chief Cabinet Secretary Hiromu Nonaka told reporters.

Specifically, the prime minister called for making more loans available from semigovernmental financial institutions and reinforcing the public credit guarantee system to ensure a smooth capital flow from commercial banks, Nonaka said.

“Despite a series of government efforts, the situation surrounding small and medium-size enterprises has been worsening,” Obuchi was quoted as telling the ministers. “In the prospect of banks’ accelerated bad loan disposal, concerns over further credit squeezing are reaching the peak among small and medium-size enterprises,” Obuchi said.

Yosano told a separate news conference after the day’s Cabinet meeting that he intends to expand the government’s current 25 trillion yen package of loans and other steps to ease the credit squeeze to levels near 40 trillion yen.

The increase signifies that the government is looking to have quasi-governmental lenders such as the Japan Finance Corp. for Small Business increase their lending frames.

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