Provisional translation

Press Conference by Shoichi Nakagawa, Minister of Finance and Minister for Financial Services

(Excerpt)

December 24, 2008

[Opening Remarks by Minister Nakagawa]

At a cabinet meeting held this morning, the Mid-term Program (concerning social security and public finances) and the government draft for the fiscal 2009 budget were decided. In addition, a meeting of the headquarters on emergency employment-related measures was held after the cabinet meeting. The Prime Minister held a press conference earlier today and expressed his resolve to implement the second supplementary budget and the fiscal 2009 budget, which he described as a “bold, action-oriented budget to defend people's daily lives” and do everything possible in the current economic, employment and financial situations. I do not have any further statements to make.

[Questions and Answers]

Q.

The government draft of the fiscal 2009 budget makes clear the government’s policy of putting a priority on economic stimulus for the moment, and its size is the largest ever. Could you tell me how you assess the fiscal 2009 budget? Also, regarding Prime Minister Aso’s remark at the press conference that he wants to ensure that Japan will be the first country to pull its economy out of recession, do you think it is possible to do so through economic measures, including those covered by the first and second supplementary budgets?

A.

As the Prime Minister said, we are in a state of emergency, so the first and second supplementary budgets include measures to provide housing and employment-related support by the end of the year and facilitate year-end financing. Thus, we have not only compiled the 88-trillion-yen budget but we are also taking tax measures as well as measures to facilitate financing and support the people’s lives and employment. I would like you to understand that the government and the ruling parties are working together to deal with the crisis through these measures as a whole. While the fiscal 2009 budget is important, it is only a part of our entire economic stimulus plan. Regarding the measures covered by the first supplementary budget, there are still remaining funds, 6 trillion yen for emergency credit guarantee and 3 trillion yen for loans, for example. We will increase funds for these measures by 14 trillion yen and 7 trillion yen, respectively. As for housing-support measures, I hear that only 1,000 families have so far applied for support, so there is still room for more support. Regarding people facing a very severe situation in the year-end and new year season, foreign people who have lost their jobs and who cannot afford to send their children to school, the Prime Minister, upon my suggestion, instructed the relevant ministries and agencies to help them send their children to school or provide a minimum level of daily life assistance. I regret to say that many experts fear that the conditions of the global economy could worsen further, leading to a further deterioration in the conditions of Japan’s economy, in light of the government’s Monthly Economic Report, so we will implement these measures without interruption. Namely, the (first) supplementary budget will be implemented in mid-January, while new crisis-response operations will start in the financial sector. In addition, we will be able to provide housing and employment-related support based on budgetary measures. We will overcome this crisis through these measures, implement the second supplementary budget and the fiscal 2009 budget so as to produce effects without interruption over the period from the end of the current fiscal year to the start of the new fiscal year and also take other measures, including a fixed amount tax reduction and other tax cuts. By doing so, we can take pride - although we cannot afford to become complacent - in that Japan is implementing bold measures one after another despite the absence of bankruptcies of financial institutions and doing everything that should be done under the leadership of Prime Minister Aso. We are hoping, if possible, to pull Japan out of the recession earlier than other developed countries. Although we have been saying that it will take three years before the Japanese economy fully recovers, this means that the process of recovery will begin earlier than this. Several times in the 1990s and the early 2000s, we saw the Japanese economy take a downturn after an incipient recovery because of a policy change. So, with a resolve to avoid repeating such a mistake by all means and to make sure to achieve a full recovery, we will continue to feel a sense of urgency in taking necessary measures.

Q.

At his press conference, Prime Minister Aso said that priority should be put on economic recovery and now is not the time to talk about such matters as a general election, the formation of a coalition and political realignment. What do you think of the view that priority should be put on economic recovery, rather than a general election?

A.

I completely agree with what the Prime Minister said. While it is necessary to hold Diet deliberations on legislation with a positive stance, as the Prime Minister said, I think that obstructing deliberations and other Diet proceedings would be irresponsible given the current situation of the Japanese people and the global conditions.

Q.

In relation to the overall assessment, which was mentioned at the beginning of this press conference, how much did you take into consideration the declaration issued at the financial summit that was held in Washington in November which called for the maintenance of fiscal sustainability and the implementation of immediate fiscal measures to stimulate domestic demand? How do you think it has affected the budget?

A.

Fiscal sustainability is not mentioned only in the G-20 agreement. I have talked about it over and over again in reference to the Basic Policies for Economic and Fiscal Management. However, we face such a rapid revenue decline and such a pressing need for tax reduction and an expenditure increase that we cannot afford to secure a surplus, so we are allowed under the G-20 agreement to take emergency fiscal measures that will have immediate effects. Also, it would be irresponsible for us to compile a budget that does not include any stimulus measures. This budget represents an extraordinary case. I would like you to understand that this does not mean we have abandoned the principle of fiscal austerity.

(End)