Economic development in the January-March period — especially in the areas of employment and bank recapitalization — is crucial to achieve the government’s 0.5 percent growth target for fiscal 1999, Finance Minister Kiichi Miyazawa said Monday.
In an interview marking his reappointment in Prime Minister Keizo Obuchi’s reshuffled Cabinet, Miyazawa expressed concern over whether the fiscal 1999 budget appropriations for employment support will be effectively used. “Sufficient amounts of money are available,” he said, but added that the issue involves people, indicating difficulties could be expected during the new fiscal year beginning April.
Both management and labor should jointly deal with the problem at upcoming spring wage talks, he said. Joblessness may rise if corporate sentiment goes from bad to worse in the current quarter, the finance chief said.
Despite the nation’s wobbly banking sector, he categorically denied that the government’s plan to cease full protection of bank deposits at the end of March 2001 would be postponed. “Many things must move ahead” toward this target date, he said, apparently referring to the nation’s “Big Bang” financial market reforms.
Under a new “payoff system” to be introduced in April 2001, the government will guarantee deposits only up to 10 million yen per depositor at banks that go bust. This system is expected to make bank customers more selective — a possible nightmare for weaker banks.
With the government’s 25 trillion yen bank recapitalization scheme ready, major banks are expected to apply for and receive public funds by the end of March. But it is still uncertain if the banks will apply for a sufficient amount to bolster their capital base, which will be provided in exchange for adequate restructuring plans.
Turning to the need for a mechanism to stabilize the yen, the dollar and the euro, Miyazawa stressed that this can be made possible only through frequent exchanges of information and gradual policy adjustments by the Group of Seven major industrialized countries. He stopped short of offering a specific scheme, however.
“Managed flexibility” in the currency markets — the concept he agreed on with his counterparts from Germany and France at the finance ministers’ meeting of Asia and Europe last week — is like a “circular triangle,” he said in trying to describe the hardships ahead in forming such a mechanism.
In the newly launched coalition government, Miyazawa, who is from the Liberal Democratic Party, must work with the Liberal Party, headed by Ichiro Ozawa. But Miyazawa said there is no animosity between them, adding that they often met and discussed security issues and even the idea of forming a coalition government.