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To: jhild who wrote (14986)	4/24/1998 1:00:00 PM
From: Moonray	Respond to of 22053

Japan announces $127 billion economic stimulus Posted at 9:50 a.m. PDT Friday, April 24, 1998 TOKYO (AP) -- Japan's Cabinet adopted a $127 billion plan today aimed at reviving the ailing economy with tax cuts and spending for new public works projects. The package was seen as crucial to restoring faith in the slumping Japanese economy. Disappointment with the measures would likely weigh on the yen and drive Japan's already struggling stock market even lower. With America's trade deficit soaring as sales to Japan plummet, the Clinton administration -- anxious about a possible deficit-induced political backlash -- wants Japan do more to restart its economy and create markets. Praising the package, Koichi Kato, secretary-general of Hashimoto's ruling Liberal Democratic Party said it ''would surprise even Rubin'' -- referring to Treasury Secretary Robert Rubin, leading the U.S. push for the economic jump-start. In Washington, however, the reaction was more muted, with the Clinton administration continuing to insist that Japan needs to undertake more fundamental reforms to fix its economy. While welcoming what he called ''substantial policy measures,'' Rubin urged the Japanese government to move quickly ''with further actions, including measures to strengthen Japan's financial system and open and deregulate its economy.'' ''The whole world, including Japan's Asian neighbors, has a strong interest in seeing Japan succeed in generating a strong domestic recvoery that will contribute to recovery in Asia,'' Rubin said in a statement. In an early sign of skepticism, the yen weakened in U.S. trading, changing hands at 131.10 to the dollar, compared with 130.18 late Thursday. Traders apparently were disappointed that Japan had no plans to give a stronger lift to the economy by making the tax cuts permanent. The long-awaited stimulus package includes $92 billion to boost domestic demand, up from Prime Minister Ryutaro Hashimoto's earlier proposal of $77 billion. Among the key components is $59 billion in spending on public projects such as construction, information and welfare. A $15 billion temporary tax cut will be carried out both this year and next year to boost consumption -- giving the average taxpayer a $225 cut in income taxes. Earlier today, a government panel decided to delay the target for cutting the budget deficit from March 2004 to March 2006 so Japan can spend more now to revive its stagnant economy. Postponing the target made it possible for those measures to be introduced. Finance Minister Hikaru Matsunaga also said today that the stimulus plan would include a promise to consider making the one-time tax cuts permanent in the future. The panel, the Conference on Fiscal Structural Reform, also decided to suspend until 2000 a provision of the budget-cutting law that would have capped growth in social welfare spending at 2 percent annually. In addition, Hashimoto said they would include a ''flexibility clause'' to the law to allow its temporary suspension in case economic conditions worsen. The revision dealt a serious blow to Hashimoto's plans to clean up government finances, which had been a top priority of his administration. o~~~ O