The government will delay privatization of the Development Bank of Japan in an attempt to sustain the country’s flagging economy, according to sources close to the matter.
The postponement, the third in eight years, highlights the government’s intention to keep providing money to riskier, longer-term development projects through the DBJ, the sources said Tuesday.
The government and ruling parties plan to submit the necessary legislation to the Diet early next year.
The plan to privatize the DBJ was agreed on in 2005 but was shelved twice, in 2008 and 2011, due to the need for government involvement in stimulating the economy following the global financial turmoil and the massive Tohoku earthquake and tsunami.
But at the same time, there has been criticism that a lender wholly owned by the government could disturb fair competition in the banking industry.
The law currently stipulates that the government will reduce its stake in the DBJ gradually to zero in a five- to seven-year period starting in fiscal 2015.
The planned bill would enable the government to hold 50 percent or more of the shares in the DBJ for the time being, while not making it clear when the bank will be privatized.
The government-backed DBJ is expected to continue funding companies with growth potential in areas such as agriculture and health care, in line with Prime Minister Shinzo Abe’s stimulus programs.
The move comes as the economy contracted for two quarters through September amid weak consumer spending and business investment following the April consumption tax hike, which has hampered Abe’s efforts to boost the economy out of nearly two decades of deflation.