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Japan mulls economic plan


Financial Post, Daily edition, Wednesday, February 11, 1998

Japan's ruling Liberal Democratic Party is considering a package of economic measures designed to increase land transactions and boost stock prices, according to a preliminary LDP report.

The package is scheduled to be released before Group of Seven finance ministers and central bankers meet in London Feb. 21.

This latest in a series of measures the Japanese government has offered in the past several years will be the first not to include additional public works spending, a nod to the government's efforts to reduce its fiscal deficit.

The LDP must cut the deficit to 3% of gross domestic product by March 2004 from 5.9% this year.

The plan will include measures to help financial institutions repackage real estate loans into securities. The party will propose the creation of an agency to purchase such securities from banks.

The LDP also wants to ease restrictions on company share buybacks. It hopes the move will lift stock prices by reducing the number of outstanding shares in the market.

To stabilize the banking system, the party is proposing the country's deposit insurance system be allowed to buy preferred shares of banks to bolster their capital, depleted after massive bad-loan writeoffs.

LDP officials said the party wants to submit these and other proposals to parliament by Feb. 20 for approval by the end of next month.

Source: This information is provided by the Financial Post.

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