Japan in Bankruptcy & Rise of Militarism

Japan to Start Compiling New Stimulus Plan
By TAKESHI TAKEUCHI

TOKYO -- Japanese Finance and Economy Minister Kaoru Yosano said the government and the ruling block will start compiling new stimulus measures to support the quickly declining economy.

"I heard that the prime minister will today order the ruling parties to compile a new economic package. I think the package will be ready by the time Aso attends the G-20 summit in London," Mr. Yosano said at a regular news conference.

Prime Minister Taro Aso and Mr. Yosano so far have only suggested the government will cobble together a new economic package after the passage of the fiscal 2009 budget bill--which has various economic stimulus measures--through parliament. With the budget bill having passed the Lower House and certain to be enacted in time for the April 1 start of the next fiscal year, Messrs. Aso and Yosano chose this timing to formally announce the plan to compile the new stimulus steps.

While the scale and content of the package have yet to be worked out, some ruling politicians are calling for new fiscal spending worth between 20 trillion yen and 30 trillion yen ($204.88 billion and $307.31 billion) to jack up the economy. They say the package will surely include measures to prop up stock prices.

Mr. Yosano didn't elaborate on the details of the new package in the news conference. But he said that, combined with the stimulus measures already implemented, the new package would take the country's total value of fiscal stimulus spending beyond 2% of the gross domestic product, the threshold that the International Monetary Fund considers necessary for each country to spend additionally to stimulate the economy.

"I agree with U.S. Treasury Secretary [Timothy] Geithner's view [to support the IMF figure]. Regardless of how to count the value of the stimulus measures, Japan will clear the goal [when the new steps are finalized]."

Mr. Yosano also said the Japanese government will inject 121 billion yen worth of public funds into three regional banks, to recapitalize them so they can lend more to small, cash-strapped firms. The announcement had been expected, as each of the three banks had previously filed requests for taxpayer money to help them through an economic recession.

Mr. Yosano said that Sapporo Hokuyo Holdings Inc., a major second-tier regional bank based in the northernmost main island of Hokkaido, will receive 100 billion yen.

Minami-Nippon Bank, based in southern Japan, will get 15 billion yen, and unlisted Fukuho Bank headquartered in central Japan will receive six billion yen, he said at a regular news conference.

Mr. Yosano left Friday for the Group of 20 countries finance chiefs' meeting, which is in preparation for the G20 summit in London on April 2.

—Atsuko Fukase contributed to this article.
Write to Takeshi Takeuchi at takeshi.takeuchi@dowjones.com