Prime Minister Junichiro Koizumi announced plans Friday to come up with a fresh economic package aimed at preventing a further decline in Japanese stock prices, following their fall to a 19-year low.
“I want steps for finances and the economy to be taken to remove worries,” Koizumi told reporters at his office.
Koizumi’s announcement came after hints from Cabinet ministers earlier in the week that such a package is needed. The benchmark Nikkei Stock Average closed at 9,129.07 on Friday after falling to a fresh 19-year low of 8,969.26 during morning trading.
Details of the plan have yet to be revealed.
Finance Minister Masajuro Shiokawa earlier Friday called for economic ministers to prepare to present measures in a meeting of the Council on Economic and Fiscal Policy on Sept. 20. Top executives of the ruling Liberal Democratic Party, however, called for an antideflation package to be drawn up Monday by the government and the ruling coalition parties.
The ruling coalition parties are expected to present such a package to the government on Monday as a basis for the economic package. The antideflation package is expected to include measures to revitalize the nation’s stock market.
“I think we need to analyze the economic situation and propose to the prime minister what steps should be strongly promoted,” Shiokawa said at a news conference.
But the package is unlikely to be finalized before Koizumi leaves for the United States on Monday afternoon, Chief Cabinet Secretary Yasuo Fukuda told a regular news conference, calling it “a tough demand.”
The LDP apparently wants the package completed Monday because Japan’s fragile economy will likely be high on the agenda at Koizumi’s meeting next week with U.S. President George W. Bush.
“I am aware that the ruling coalition parties will present an emergency package to the government to overcome deflation,” Fukuda said. “We will examine the proposals thoroughly.”
Government sources said economic ministers may meet Monday morning, prior to Koizumi’s departure, to discuss the plan.
The meeting is expected to be attended by Koizumi, Shiokawa, Chief Cabinet Secretary Yasuo Fukuda, Financial Services Minister Hakuo Yanagisawa, Takeo Hiranuma, economy, trade and industry minister, and Heizo Takenaka, economic and fiscal minister, the sources said.
Among the measures likely to be considered for the package are the reinforcement of bad-debt buyback functions of the state-run Resolution and Collection Corp., proposed tax cuts for fiscal 2003, and the swift implementation of the fiscal 2002 budget.
Shiokawa said the steps to be presented Sept. 20 should be aimed at tackling the root of the problem of the Japanese economy, and not be just ideas created “on an impulse” to shore up stock prices.
The finance minister said his own proposals will include putting the fiscal 2002 budget into effect quickly and steps involving taxes, which he did not elaborate on.
Shiokawa acknowledged calls for the compilation of an extra budget for the current fiscal year but said that was not being considered. The stock plunge “cannot be cured by fiscal steps,” he said.
He also said the Finance Ministry will consider simplifying the tax system related to stock trading by setting up a forum involving the ministry, the National Tax Agency and the Securities Dealers Association of Japan.
Although a new tax system on stock trading will start in January, criticism is rising that it is complicated and may help drive away investors, especially individuals, from the stock market. Hiranuma meanwhile said measures to boost the nation’s financial system, including the consolidation of financial institutions, are necessary to cope with the situation.
A significant amount of corporate tax breaks to encourage investment and other key activities are also necessary, Hiranuma said.
Italy trip shortened
Heizo Takenaka, economy and fiscal policy minister, will leave Italy a day earlier than planned and return to Tokyo on Sunday afternoon, the Cabinet Office said Friday.
Takenaka is apparently seeking to join discussions on proposed additional stock price-boosting measures by cutting the trip short.
Takenaka is in the northern Italian city of Como attending an international conference on world political and economic issues.
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