FOCUS: Japan gets G-20 backing for more spending, benefactor role+

LONDON, April 3 Kyodo - Japan got an official go-ahead for its additional stimulus plan at the just-concluded global financial summit in London, as summiteers managed to show a united front on the need to carry out stimulus measures to buoy the faltering global economy.

Prime Minister Taro Aso also presented once again Tokyo's steadfast position of
being a generous financial contributor to help embattled developing economies
hurt by the current economic crisis. He pledged to boost Japan's aid for Asian
neighbors and bolster support for trade finance.
Although Japan has limited space for ambitious fiscal spending plans as it is
saddled with the heaviest debts among rich countries, Aso snubbed concerns
about fiscal sustainability and declared just before his departure for London
that Tokyo will compile fresh stimulus steps by mid-April.
The fresh economy-boosting steps will come on top of the already implemented
spending plans involving fiscal spending of 12 trillion yen, equivalent to 2
percent of the nation's gross domestic product. The Japanese leader said he
will ''not hesitate to issue deficit-covering bonds.''
Following the end of the summit, Aso told reporters that the London gathering
''confirmed the need for each nation to implement the maximum measures to
revive demand and ensure job security,'' including fiscal stimulus steps.
The premier said he is seeking to adopt ''the largest possible'' new economic
package under the nation's current fiscal conditions. Government sources
expected that the upcoming economy-boosting steps will involve at least 10
trillion yen of fiscal spending.
Prior to the summit, Aso preached the necessity of fiscal mobilization in an
interview with the Financial Times, criticizing Germany for being reluctant to
boost stimulus spending.
The premier said the European nation does not understand the importance of
fiscal mobilization, of which Japan is keenly aware from its experience of
overcoming a recession following the burst of its asset-inflated bubble economy
in the early 1990s, Japanese officials said.
Critics fear, however, that aggressive fiscal policy could further cripple the
nation's fiscal position. The balance of Japan's outstanding debts was
estimated to reach about 170 percent of its GDP in 2008, according to an
Organization for Economic Cooperation and Development survey.
The International Monetary Fund also pointed out in March that among the G-20
nations, Japan, Italy and India have ''less room to expand spending'' as they
shoulder ''elevated debt levels.''
Some economists blame Japan's past practice of massive fiscal spending as
wasteful pork-barrel policy, as it often involved ''white elephant''
construction projects.
Aso is believed to be keen to boost spending to rescue both Japan's sinking
economy and his sagging popularity. The premier has suggested that he may
dissolve the House of Representatives to call a snap general election in May.
On financial aid for developing economies, the premier took pride in Japan
being the first to provide support to help them weather the current financial
storm.
The G-20 leaders agreed to triple the financial resources of the International
Monetary Fund at the London summit so that the fund can expand lending to poor
nations, with economies such as the European Union, China, Canada and Norway
offering to provide funds to the Washington-based lender.
Japan announced its $100 billion contribution to the IMF during the previous
financial summit in Washington last November and has already signed an official
accord with the fund on the deal.
The G-20 economies also committed themselves to providing a total of $250
billion in support for trade finance. As part of the grand initiative, Japan
increased its existing aid for trade financing to $22 billion.
Aso indicated his satisfaction with the G-20 pledge for aid, saying he believes
Tokyo ''played an important role in formulating a G-20 accord'' on assistance
to poorer nations.
==Kyodo
2009-04-03 21:01:39