$5 billion jolt outlined for Japanese businesses
2013-01-08 12:42:29
The new Japanese government is considering programs worth ¥433 billion this week to bolster businesses, including help for them in buying foreign companies, under a draft economic stimulus package viewed by Reuters on Monday.
The package of nearly $5 billion is being studied with Prime Minister Shinzo Abe making economic revival his top priority after his Liberal Democratic Party won elections last month. Mr. Abe wants to combine aggressive monetary easing — manipulation of interest rates and money supply — with government spending to encourage investment and growth.
The Development Bank of Japan, a state-backed lender, would administer a ¥150 billion lending program to encourage companies to develop new technologies and collaborate on new business lines, according to the draft proposal.
The stimulus package would also establish a ¥200 billion fund at the Japan Bank for International Cooperation, another state-sponsored lender, to encourage foreign mergers and takeovers. The draft showed an additional ¥83 billion in loan guarantees and low-interest-rate loans for small businesses.
The government would set aside ¥100 billion for the lending program at the Development Bank of Japan in a supplemental budget; the lender would use its own capital for the remaining ¥50 billion.
Government spending on the program at Japan Bank for International Cooperation would total ¥70 billion. Lending from that bank and private-sector banks would account for the remaining ¥130 billion.
A Liberal Democratic Party subcommittee approved the draft Monday, and it could be approved by the cabinet as soon as this week.
The total size of the government’s stimulus package could be about ¥10 trillion, with half devoted to public works, a person close to Mr. Abe said last month; the person was not authorized to speak to the news media. The draft seen Monday did not contain any details of plans for public works spending.
Senior members of the Liberal Democratic Party have said they want to spend some of the stimulus to repair roads, tunnels and schools, raising concerns that the party is falling back on the excessive public works spending that was the hallmark of its more than nearly continuous governance of the country, lasting half a century.
Mr. Abe’s spending promises have raised concerns that the public debt burden in Japan, already the worst among major economies, could increase further, and some economists say structural changes might have a bigger effect after years of stop-start growth. Mr. Abe has instructed the finance minister to disregard borrowing limits set by the previous government.