Identifier
Created
Classification
Origin
08TOKYO3079
2008-11-05 07:54:00
CONFIDENTIAL
Embassy Tokyo
Cable title:
PM ASO ANNOUNCES SECOND STIMULUS PACKAGE
how-toVZCZCXRO3337 PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB RUEHRN DE RUEHKO #3079 3100754 ZNY CCCCC ZZH P 050754Z NOV 08 FM AMEMBASSY TOKYO TO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY RUEHSS/OECD POSTS COLLECTIVE PRIORITY RUEHFK/AMCONSUL FUKUOKA PRIORITY 0768 RUEHNH/AMCONSUL NAHA PRIORITY 3132 RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 4553 RUEHKSO/AMCONSUL SAPPORO PRIORITY 1343 RUEHC/SECSTATE WASHDC PRIORITY 8536 RUEATRS/TREASURY DEPT WASHDC PRIORITY
C O N F I D E N T I A L TOKYO 003079
SIPDIS
TREASURY IA FOR FOSTER, WINSHIP
E.O. 12958: DECL: 11/04/2018
TAGS: ECON EFIN PGOV JA
SUBJECT: PM ASO ANNOUNCES SECOND STIMULUS PACKAGE
REF: TOKYO 2393
Classified By: Deputy Chief of Mission James Zumwalt for reasons 1.4 b/
d.
C O N F I D E N T I A L TOKYO 003079
SIPDIS
TREASURY IA FOR FOSTER, WINSHIP
E.O. 12958: DECL: 11/04/2018
TAGS: ECON EFIN PGOV JA
SUBJECT: PM ASO ANNOUNCES SECOND STIMULUS PACKAGE
REF: TOKYO 2393
Classified By: Deputy Chief of Mission James Zumwalt for reasons 1.4 b/
d.
1. (C) Summary: Prime Minister Aso announced a new 26.9
trillion ($269 billion),economic stimulus package October
30. The package equals 5.2% of Japan's GDP and is intended
to mitigate the negative impact of the global credit crisis
on Japan's real economy. The new stimulus package follows
the August 29 $106 billion stimulus package (ref). The
proposed package consists of 2.5 trillion in tax cuts, 2.6
trillion in fiscal spending measures, and 21.8 trillion of
government loan guarantees for SMEs. However, the direct
impact of the package is estimated to be about 3.8 trillion,
only 0.7% of GDP. End Summary.
Details of the Stimulus Package
--------------
2. (SBU) The most important elements of the new package,
Japan's second in less than two months, are the commitment
to provide 2 trillion ($20 billion) in taxpayer payouts to
all households by March 2009, and the passage of a new bank
recapitalization law that will allow up to 10 trillion ($100
billion) of public funds to be injected into regional and
major banks. The package also contains a variety of other
measures to stabilize the financial system, including
government support of the Accounting Standard Board of
Japan's reclassification of mark-to-market standards for
certain financial instruments, allowance of capital adequacy
ratio flexibility for domestically operating banks, and
consideration of resuming share purchases through the Banks'
Shareholding Purchase Corporation (BSCP). It also includes
measures to support households and businesses through subsidy
programs, increased SME loan guarantees, and a pledge to
allow employees to contribute to defined contribution pension
plans (in addition to present employer contributions).
Impact on Fiscal Budget
--------------
3. (SBU) The additional spending measures will be financed
by a second supplemental budget for FY2008, which the Aso
Cabinet plans to submit to the Diet in late November.
Surplus funds in the Fiscal Loan Fund Special Account will
also be used to secure necessary funding. Nonetheless, it is
likely that a large-scale issuance of government bonds will
be required , given already high levels of GOJ expenditures
and smaller-than-estimated tax revenues resulting from the
economic slowdown, casting doubt on the government,s effort
to reach primary fiscal balance by FY2011.
SCHIEFFER
SIPDIS
TREASURY IA FOR FOSTER, WINSHIP
E.O. 12958: DECL: 11/04/2018
TAGS: ECON EFIN PGOV JA
SUBJECT: PM ASO ANNOUNCES SECOND STIMULUS PACKAGE
REF: TOKYO 2393
Classified By: Deputy Chief of Mission James Zumwalt for reasons 1.4 b/
d.
1. (C) Summary: Prime Minister Aso announced a new 26.9
trillion ($269 billion),economic stimulus package October
30. The package equals 5.2% of Japan's GDP and is intended
to mitigate the negative impact of the global credit crisis
on Japan's real economy. The new stimulus package follows
the August 29 $106 billion stimulus package (ref). The
proposed package consists of 2.5 trillion in tax cuts, 2.6
trillion in fiscal spending measures, and 21.8 trillion of
government loan guarantees for SMEs. However, the direct
impact of the package is estimated to be about 3.8 trillion,
only 0.7% of GDP. End Summary.
Details of the Stimulus Package
--------------
2. (SBU) The most important elements of the new package,
Japan's second in less than two months, are the commitment
to provide 2 trillion ($20 billion) in taxpayer payouts to
all households by March 2009, and the passage of a new bank
recapitalization law that will allow up to 10 trillion ($100
billion) of public funds to be injected into regional and
major banks. The package also contains a variety of other
measures to stabilize the financial system, including
government support of the Accounting Standard Board of
Japan's reclassification of mark-to-market standards for
certain financial instruments, allowance of capital adequacy
ratio flexibility for domestically operating banks, and
consideration of resuming share purchases through the Banks'
Shareholding Purchase Corporation (BSCP). It also includes
measures to support households and businesses through subsidy
programs, increased SME loan guarantees, and a pledge to
allow employees to contribute to defined contribution pension
plans (in addition to present employer contributions).
Impact on Fiscal Budget
--------------
3. (SBU) The additional spending measures will be financed
by a second supplemental budget for FY2008, which the Aso
Cabinet plans to submit to the Diet in late November.
Surplus funds in the Fiscal Loan Fund Special Account will
also be used to secure necessary funding. Nonetheless, it is
likely that a large-scale issuance of government bonds will
be required , given already high levels of GOJ expenditures
and smaller-than-estimated tax revenues resulting from the
economic slowdown, casting doubt on the government,s effort
to reach primary fiscal balance by FY2011.
SCHIEFFER