The Japanese government's new $7.5 billion plan to pep up the country's economy was greeted with considerable enthusiasm today by American officials eager for any maneuver that might help attract more imports into Japan from the U.S. and other countries.
The sort of old-fashioned pumppriming announced yesterday by Prime Minister Takeo Fukuda was roughly what U.S. officials had hoped Japan would undertake to stimulate growth and encourage the buying of more foreign goods.
Mike Mansfield, the U.S. ambassador, called Fukuda's package "a good step along the lines to what we had hoped for. We had hoped they would have done it a months ago, but we are pleased."
The package was disclosed on the eve of high-level talks between Japanese officials and representatives from the U.S. Treasury and State Department. The meetings, which open Tuesday, are the first of several scheduled this fall on economic and trade issues between the two countries.
The United States suffering a huge trade imbalance with Japan has been urging such economic stimulation for months. If the Japanese economy booms they figure, more American commodities and manufactured goods will be sought by Japanese consumers.
A cautious man in economic affairs, Fukuda previously has insisted that too swift a stimulation would induce a new wave of inflation here. Not until yesterday was it known how far he was willing to go.
In a speech today the Prime Minister appeared to have abandoned his doubts. He proudly told the Shimoda Conference, an assembly of prominent leaders from Japan and the U.S. that his economic package will produce "significant signs of improvement in the last half of this year."
At the economic summit meeting in London last May, Fukuda pledged a growth rate 6.7 per cent during the current fiscal year. He acknowledged today that domestic investment "has not grown as we anticipated" and said that without additional stimulus this year's growth would be only about 6 per cent.
The government's new measures, he said, would be sufficient to reach the target he set in May. "I am convinced that the 6.7 per cent growth rate can be reached with certainty," he said.
The heart of the new plan is a $7.5 billion supplemental budget composed of accelerated public works programs, government loans for new housing and additional public works projects for local governments.
In additional the Bank of Japan Saturday lowered its official discount rate from 5 to 4.25 per cent as a step toward reducing the costs of new business investment. Fukuda noted today that is the bank's lowest ratesince World War II.
The package was worked out last week by Fukuda, top leaders of the government, and members of the ruling Libera-Democratic party and is expected to receive cabinet approval this week. It will be presented to a special session of the parliament early in October.