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Thursday, Sept. 30, 2010
Economic policies that instill hope
As Prime Minister Naoto Kan's new Cabinet goes into full swing, it is important for the government to adopt and carry out effective economic policies speedily. With economic policy, not only substance but also psychological factors are important.
Under the shadow of long deflation, people and enterprises are suffering from a sense of helplessness. The government should present policy measures that help them discard their gloomy outlook and take a positive view of the future.
As Japan faces strengthening of the yen and the downward trend in stock prices, the crucial task for the Kan administration is to take every step to prevent the Japanese economy from falling into a second dip.
On Sept. 10, the Cabinet adopted a package of economic measures. They include deregulation and measures to stimulate consumption, improve anti-disaster efforts and help enterprises increase investment inside Japan. The government decided to use a ¥915 billion emergency fund included in the fiscal 2010 budget to implement the measures — a reasonable move.
As a second step, the government plans to submit a supplementary budget to a Diet session that begins in early October. The planned budget will move forward the spending intended for areas in which new growth is expected — environment-friendly industries, medical, nursing care and child rearing-related services, etc.
To fund the supplementary budget, the Kan administration plans to use a surplus of some ¥800 billion from the fiscal 2009 budget. It is also considering using ahead of schedule the ¥1 trillion that has been set aside in the fiscal 2010 initial budget for future yearly installment payments.
The political ability of Mr. Kan, his Cabinet members and the Democratic Party of Japan leadership will be tested in their efforts to get cooperation from the opposition forces, which control the Upper House. The Kan administration also must prioritize projects in the fiscal 2011 budget because budget requests from ministries and agencies have bloated.
It is imperative that the government achieve results whose effects people and enterprises can feel.