The government should inject a substantial amount of public funds into financial institutions and implement large-scale fiscal stimulus measures to prop up the economy, members of an advisory body to Prime Minister Keizo Obuchi said Wednesday.During the day’s discussions of the Strategic Economic Council, some members of the panel, including Hitotsubashi University Professor Iwao Nakatani, pointed out that the economy was currently facing the threat of severe deflation. Against this backdrop, it is imperative that the government take steps to deal with the ailing financial sector and sluggish demand, the members said.The council was set to draw up possibly by its next meeting Wednesday an emergency appeal outlining short-term policies the government should take to address the economic situation. In suggestions made Wednesday, many participants agreed the infusion of public money into banks is indispensable.Some said that unless the government can avert the failure of financial institutions, implementation of other measures would be meaningless. Others demanded separating the debate over the culpability of bank executives from that of using taxpayer money to recapitalize financial firms.As for short-term measures, the council is expected to draw up recommendations focusing on four pillars: income and corporate tax reductions; steps to spur housing investment; urban and infrastructure development; and boosting employment.Chief Cabinet Secretary Hiromu Nonaka acknowledged during a news conference Wednesday that the council is calling for injection of “a bold amount” of public funds into weakened financial institutions. “We’ve listened, with due respect, to the opinions of those experts and I intend to convey this to the Diet,” he said.
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