The government approved a bill Tuesday to enable the allocation of grants to municipalities with severe employment conditions.
The bill to revise grant-related laws would earmark ¥500 billion to help create jobs in municipalities whose economic conditions, such as per capita income and the ratio of job offers to job seekers, fall below certain levels.
The temporary step would be valid in the 2009 and 2010 fiscal years.
The sum is part of a ¥1 trillion grant to municipalities that is the brainchild of Prime Minister Taro Aso.
The bill would also enable municipalities to issue bonds for five years through fiscal 2013 to finance steps to liquidate unprofitable regional public entities, including those partially run by the private sector.
The government will submit the bill to the Diet this legislative session so it will come into force April 1.
Meanwhile, the government also approved a bill to spur commerce in depressed shopping districts amid the deepening recession.
Nonprofit organizations starting up in business, including merchandise stores and restaurants, in vacant store space would be eligible to have up to half the startup costs financed by an interest-free loan.
The loans would be put up by the central and local governments. In fiscal 2009, the central government would earmark ¥2 billion for such loans.
The bill would revise two existing laws — the urban rejuvenation special measures law and the urban development funding law.