Japanese OK Plan to Retool Economy
Japanese Prime Minister Junichiro Koizumi’s cabinet formally approved an economic restructuring plan aimed at curing the ailing economy.
The cabinet approved the blueprint drawn up by the Economic and Fiscal Policy Council, Finance Minister Masajuro Shiokawa said.
The guidelines focus on measures to clear up bad debts choking the financial system, rein in government spending and reduce the public sector’s role in the economy.
Economic Minister Heizo Takenaka has said the guidelines are meant to return Japan’s economy to a state in which it can achieve economic growth of 2% to 3% a year.
He said officials hope that growth can rise to about 3.5% once the reforms outlined in the economic blueprint kick in.
After details of the plan were released last week, Takenaka said the economy probably will be flat or grow 1% over the next two or three years, far below the government’s prediction of 1.7% growth in the fiscal year ending in March.
That is largely due to the bankruptcies and layoffs that are expected to result from Koizumi’s reforms.
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