Gov't, ruling bloc eye additional large stimulus steps+

TOKYO, Feb. 15 Kyodo - The government and the ruling parties will draw up additional large-scale economic measures that could require up to 20 trillion yen in fiscal spending to help lift the Japanese economy out of a recession, sources familiar with the matter said Sunday.

The government and the ruling coalition -- the Liberal Democratic Party and the
New Komeito party -- hope to compile the fresh stimulus steps worth 100
trillion yen and announce the plan ahead of the summit meeting of the Group of
20 economies in London on April 2 and the release of corporate earnings reports
for fiscal 2008 through March, the sources said.
The size of the planned economic steps will exceed 75 trillion yen, which is
the combined size of three economic measures adopted last August, October and
December.
The government and the ruling parties hope to finance the stimulus steps by
compiling a supplementary budget for fiscal 2009 that will start in April.
But Prime Minister Taro Aso will carefully decide on the timing of the
compilation of the bill and its passage as the move will affect the timing of a
possible dissolution of the House of Representatives and a subsequent general
election, the sources said.
They added there is speculation that in case Aso decides to propose further
economic steps, he may postpone the Diet dissolution to sometime after the July
12 election for the Tokyo metropolitan assembly from sometime between the
currently mulled spring and early summer.
The decision to implement additional stimulus measures emerged a day before the
release of Japan's gross domestic product data for the October-December period
on Monday morning, which is widely expected to show an annualized double-digit
percentage contraction in real terms.
Following the release of a preliminary GDP data, Aso is expected to formally
instruct the government and the ruling camp to study additional economic
measures, the sources said.
However, the move to compile additional stimulus steps during the deliberations
of the fiscal 2009 budget will draw fire from opposition parties and the
schedule of the passage of the regular budget may be affected, they said.
Already on Sunday, Ichiro Ozawa, leader of the main opposition Democratic Party
of Japan, told reporters the compilation of extra stimulus measures would be
''an extremely dishonorable and senseless decision'' because it would be the
same as ''admitting that the (regular) budget bill currently under
deliberations has defects and cannot boost the economy.''
Former Prime Minister Shinzo Abe said last week a fiscal expenditure of more
than 20 trillion yen is necessary to finance fresh stimulus measures.
Yoshihide Suga, deputy chairman of LDP's Election Strategy Council, said on a
television program on Sunday morning he is aware that various figures regarding
the size of fresh stimulus steps, such as 25 trillion yen in fiscal spending,
have been floated.
The government plans to issue construction bonds to finance the extra budget
while it is also expected to consider an additional issuance of
deficit-covering bonds, the sources said, adding an idea of issuing
noninterest-bearing government bonds with a benefit of accession tax exemption
has been also floated.
According to the sources, the envisioned economic package will likely sharply
increase public works projects such as the construction or renovation of
airports, ports and highways in light of severe employment situations in Japan.
Specifically, the government aims to move up the schedule of the expansion work
for Tokyo's Haneda airport and the construction of new shinkansen bullet train
lines, the sources said.
The fresh steps will also likely include tax incentives and the promotion of
photovoltaic power generation as part of Japan's version of a ''Green New
Deal'' policy, which aims to bolster economic growth by promoting measures to
tackle global warming.
==Kyodo
2009-02-15 20:48:49