Aso orders gov't to form fresh stimulus steps, extra budget+

TOKYO, March 31 Kyodo -
Prime Minister Taro Aso ordered the government Tuesday to compile fresh
economic steps by mid-April in a bid to weather the recession, aiming to submit
an extra budget for fiscal 2009 containing the steps to the current Diet
session.
Aso stressed at a news conference that the country is still in dire straits
despite a series of economic steps he has implemented since late last year and
that ''a new economic package must be worked out quickly'' to address the
slump.
On the closely watched timing for the dissolution of the House of
Representatives, Aso said that he would decide on the matter depending on
whether the opposition camp smoothly endorses or rejects the extra budget for
the new fiscal year from Wednesday.
''A decision on whether to push through the extra budget or rather to call an
election over it will rest with me,'' Aso said prior to his departure for
London to attend a two-day Group of 20 financial summit beginning Wednesday.
Since taking office last September, the 68-year-old prime minister has refused
to dissolve the Diet for an election despite pressure from both the opposition
parties and the public to do so, saying he was focusing on reviving the
recession-hit economy.
He added, however, ''Once we submit (the extra budget), we will make the utmost
efforts to get it passed as smoothly as possible.''
Earlier in the day, Aso said in a meeting between the ruling bloc and the
government that given the seriousness of the economic crisis, he will ''not
hesitate to issue deficit-covering bonds'' to pay for the envisioned steps if
more funds are needed on top of reserves in the special account for fiscal
investment and lending, and construction bond issues.
Finance Minister Kaoru Yosano told reporters after the meeting, ''I (myself)
believe that what we need is to prepare steps to prevent the economy from
sinking deeper into recession and prevent as much as possible social tragedies
such as unemployment, employment instability and corporate bankruptcies.''
Aso said the fresh economic package should extend for a number of fiscal years
and be compiled at an early stage, by mid-April.
The government is expected to submit an extra budget containing the measures to
parliament as early as in late April and is aiming to pass it during the
ongoing session through June 3.
On the scale of the economic steps, Aso said that no specific figures have been
decided. But one government source said, ''At least around 10 trillion yen of
fiscal spending would be necessary to pay for the measures.''
To rectify Japan's supply-demand gap, which stands at around 20 trillion yen,
the government is expected to draft a large-scale extra budget to finance
''drastic steps to expand domestic demand and create jobs,'' another government
source said.
Aso said, based on the strategic programs laid out Monday by his ruling Liberal
Democratic Party, that the new steps would include programs to boost solar
power generation and other environmentally friendly technologies, improve
social infrastructure, and beef up facilities and services in the fields of
medicine and nursing care.
During a speech last weekend, the prime minister also proposed tax breaks to
encourage elderly people to donate assets to their children while they are
alive so as to help stimulate consumption.
On Tuesday afternoon, Aso also ordered the LDP Research Commission on the Tax
System to explore what can be done in terms of taxation to help implement the
fresh steps smoothly.
Yuji Tsushima, chairman of the commission, told reporters after the meeting
that the possibility of gift tax cuts came up at the meeting with Aso, but no
details were discussed.
A tax system revision in the midst of a fiscal year would be ''extremely
unusual,'' Tsushima said, adding that the nation is beset by ''an unusual
(economic) situation'' and that special consideration is necessary.
Noting that elderly people hold much of the nation's individual financial
assets, Aso said at Tuesday's news conference, ''It is extremely important to
search for ways to utilize these financial assets in order to bolster demand.''
Asked if he has given up on the government's long-held goal of achieving a
surplus in the primary balance during fiscal 2011, Aso said that it continues
to be one of the most important goals but added, ''I would like you to
understand that my top priority is (to implement) economic measures.''
Japan, which is heavily dependent on exports, is mired in what Aso has
described as an unprecedented economic recession and its gross domestic product
registered an annualized 12.1 percent contraction in the October to December
period, the fastest decline since 1974.
Since last year, the Aso administration has worked out a set of fiscal stimulus
steps worth a total of 75 trillion yen, involving actual fiscal spending of 12
trillion yen that will amount to about 2 percent of Japan's roughly 500
trillion yen gross domestic product.
The existing steps, financed by two extra budgets for fiscal 2008 ending
Tuesday and the principal budget for fiscal 2009, include a controversial cash
handout plan under which individuals receive payments ranging from 12,000 yen
to 20,000 yen.
Despite heavy fiscal spending, Aso has struggled with low support ratings,
although his popularity has recovered somewhat after a fundraising scandal
earlier this month involving an aide to main opposition Democratic Party of
Japan President Ichiro Ozawa.
==Kyodo
2009-03-31 22:14:24