Japan backs further aid package

Page last updated at 11:22 GMT, Saturday, 20 December 2008

BBC

http://news.bbc.co.uk/2/hi/business/7793337.stm

The Japanese cabinet has approved another $54bn (£36bn) package of spending, to try to ease the recession.

It is the second extra budget approved by MPs and is designed to help finance tax cuts for homeowners, loans to small businesses and aid laid-off workers.

Last week, the government increased its economic stimulus plan by $255bn (£171bn).

The Bank of Japan cut its benchmark interest rate to 0.1%, on Friday in a bid to kick-start the economy.

The BOJ also announced that it would increase its purchase of Japanese government bonds to 1.4 trillion yen ($15.7bn; £10.5bn) a month, up from 1.2 trillion yen.

The government has forecast zero growth in the year ending March 2010.

Japan, the world's second largest largest economy, is already the most indebted country in the developed world.

Popularity falling

In all, the Japanese government will need to raise about $114bn to fulfil its spending plans.

The finance plans set out by Prime Minister Taro Aso mean Japan will have to do more borrowing.

The BBC's Duncan Bartlett in Tokyo says some politicians within Mr Aso's own party have balked at the sums involved and his personal popularity rating with voters has fallen sharply.

After 2001, Japan enjoyed its longest period of economic growth since World War II until the sub-prime crisis started a year ago.

The global downturn has led to global demand falling significantly, while a rising yen has also hit exporters.

Japan's economy slipped into its first recession in seven years after two quarters of negative growth in a row.

FAS; Easing measure for small companies loan

7 Nov 2008, FAS announced to ease classification for under bank's control loans. The government is alarmed by small and mid size companies cash flow for the year end due to the sluggish economy and set measures to stimulate banks to lend more.

http://www.fsa.go.jp/access/20/200811.pdf

According to FAS manual, loan portfolios are classified into 6 as follows;

Good loans

Cautions loans

Under bank's control loans

Bankrupt concerned loans

As good as bankrupt loans

Bankrupt loans