No. 37 — August 29, 2000

 

Weekly Review

NOTES

Prime Minister Yoshiro Mori ended recent speculation over the course of his administration's fiscal policy by announcing September 21 that the government would draft yet another economic stimulus package. Consultations between the Liberal Democratic Party and its coalition partners, the New Komeito and the New Conservative Party, yielded a consensus to assemble a list of central and local government spending initiatives worth a total of ¥10 trillion ($90.9 billion at ¥110=$1.00).

This money will be used to promote four major objectives: improving information technology, protecting the environment, building up the urban infrastructure and delivering services for an aging population. Hoping to come up with a plan that can be implemented fairly quickly, Mr. Mori instructed ministries and agencies to submit project proposals by October 6. His administration then will compile a ¥4 trillion ($36.4 billion) supplemental budget bill for submission to the 72-day special Diet session that began September 21.

With an eye on calming the many fiscal conservatives within the LDP and the government, the prime minister stressed that the stimulus package should rely as little as possible on new borrowing. He pledged to use the ¥1 trillion ($9.1 billion) surplus from FY 1999 to help defray the cost of what will be &emdash; discounting purely deregulatory packages and those aimed at resolving the banking industry's nonperforming-loan crisis &emdash; the eleventh fiscal stimulus plan since mid-1992 (see Table 1).

Table 1: Economic Stimulus Packages, FY 1990-FY 1999

(in trillions of yen)

Date

Value

August 1992

¥10.7

April 1993

13.2

September 1993

6.0

February 1994

15.3

April 1995

4.8

September 1995

14.2

October 1997

*

December 1997

2.0**

February 1998

*

April 1998

16.7

October 1998

***

November 1998

23.9

July 1999

0.542

December 1999

18.1

September 2000

10.0

Total

135.4

*No exact value given for proposed deregulatory and other measures.
**Bank recapitalization plan worth up to ¥30 trillion also announced.
***Bank restructuring and recapitalization plans worth 43 trillion announced (replaced December 1997 plan).

Source: Ministry of Finance

The extra budget will mean that Japan has spent &emdash; or at least earmarked &emdash; more than ¥40.7 trillion ($370 billion) since FY 1990 to get its economy rolling (see Table 2). Even though real gross domestic product increased relatively strongly in the first half of 2000 (see JEI Report No. 35B, September 15, 2000), recent and current indicators raise some questions about the future direction of the world's second-largest economy.

Table 2: Supplemental Budgets to the General Account Budget,
FY 1990-FY 1999

(in billions of yen)

Date

Value

FY 1990


aa December 1990

¥2,281.0

aa March 1991*

1,133.4

aa aa Subtotal

3,414.4

FY 1991


aa December 1991

266.0

FY 1992


aa December 1992

-728.3

FY 1993


aa June 1993

2,188.7

aa December 1993

708.7

aa February 1994

2,185.2

aa aa Subtotal

5,082.6

FY 1994


aa February 1995

-673.5

aa March 1995

1,022.3

aa aa Subtotal

348.8

FY 1995


aa May 1995

2,726.1

aa October 1995

5,325.2

aa February 1996

-1,004.4

aa aa Subtotal

7,046.9

FY 1996


aa January 1997

2,666.3

FY 1997


aa March 1998

1,143.2

FY 1998


aa June 1998

4,645.5

aa (October 1998**

43,000.0)

aa December 1998

5,676.9

aa aa Subtotal

10,322.4

FY 1999


aa July 1999

369.8

aa December 1999

6,789.0

aa aa Subtotal

7,158.8

FY 2000


aa September 2000

4,000.0

Net Total

40,721.1

*Primarily to fund Japan's contribution to the allied Persian Gulf War effort.
**Authorization-only for government bond guarantees to assist Japan's banking industry which is not included in the FY 1998 subtotal or the net total.

Source: Ministry of Finance

 

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute.

This is the final issue of JEI Report.
All members of the JEI staff wish to thank subscribers to the publication
for their loyalty and support over theyears.

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