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Japanese Gov't Planning Additional Economy-Spurring Measures
Source: japantoday.com
Source Date: Monday, August 23, 2010
Focus: E-Procurement
Country: Japan
Created: Aug 23, 2010

The government has started planning additional measures aimed at addressing the slowing economy and stronger yen, government sources said Monday. The measures are expected to include stimulating personal consumption of eco-friendly products, helping new graduates find jobs and revitalizing small and midsize companies, they said.

Regarding financial resources for the implementation of additional measures, ideas such as using part of a surplus in the fiscal 2009 budget or part of the reserves compiled in the fiscal 2010 budget have been floated.

But it remains uncertain whether the government will be able to hammer out and implement measures swiftly in the divided Diet, where opposition parties control the upper house and the ruling coalition the lower house.

Following the release Monday of slower-than-expected gross domestic product growth data showing the Japanese economy expanded an annualized real 0.4% in the quarter through June, Prime Minister Naoto Kan ordered Finance Minister Yoshihiko Noda and other related ministers to report on the current economic situation and outlook.

“We need to closely watch (the economy) including foreign exchange,’’ Kan told reporters, referring to the growth data and the recent sharp rise in the yen against the U.S. dollar and other major currencies, which has had a negative impact on the earnings of Japanese exporters.

Last week, the dollar hit a 15-year low in the upper 84 yen level, prompting calls from political and business circles for action to halt the yen’s appreciation.

The government will consider specific economic measures based on reports from Noda as well as Satoshi Arai, state minister in charge of economic and fiscal policy, and Masayuki Naoshima, economy, trade and industry minister, the sources said.

The government ‘‘should prioritize economic measures over compiling the fiscal 2011 budget and tax revisions’’ in order to prevent the economic recovery stalling, a senior Cabinet Office official said.

The government has started analyzing the scale of adverse effects on the economy stemming from the expiration of its ‘‘eco-car’’ subsidy and ‘‘eco-point’’ incentive programs for appliances in September and December, respectively.

Kan, who has emphasized fiscal reconstruction, is expected to avoid additional issuance of deficit-covering bonds.

Some potential ideas for financial resources include using 920 billion yen, the remaining balance of 1 trillion yen set aside in the fiscal 2010 budget to deal with the economic crisis and local revitalization, the sources said.
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