Japan to give $30b in aid to SE Asia
Japan to give $30b in aid to SE Asia
TOKYO (Agencies): Japan's Finance Minister Kiichi Miyazawa said Wednesday Tokyo would unveil a US$30 billion rescue package for Southeast Asia at Saturday's Group of Seven meeting in Washington.
"During this upcoming G-7 meeting I would like to present what Japan can do for Asia," Miyazawa told reporters.
"I think Japan's direct contribution to Southeast Asia is likely to be $30 billion," he said.
The money would be aimed mainly at the ASEAN five, the original members of the Association of Southeast Asian Nations: Indonesia, Malaysia, the Philippines, Singapore and Thailand, he said.
"The Japanese contribution will include a guarantee by the Export-Import Bank of Japan on Asian countries' plans to borrow money from the market as well as Japanese yen loans," he said.
The package would also involve Japan buying government bonds from Asian nations, he said.
"Japan can make various kinds of contributions. If the G-7 approves the plan we will carry it out."
Miyazawa said he had asked his vice finance minister Eisuke Sakakibara to draw up a detailed program on the deal for the U.S. meeting.
G-7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.
Japan is expected to be pressed at a G-7 meeting this weekend to come up with urgent steps to stabilize its banking sector and put its floundering economy back on track, economists say.
In the face of global turmoil that has also put the U.S. economy under pressure and prompted the Federal Reserve to cut a key short-term interest rate on Tuesday, Japan alone cannot continue to hold back the world economy, they said.
"The pressure on Japan to give an immediate answer on how it will deal with its banking and economic problems will become stronger than ever before amid the global turmoil," said Susumu Takahashi, a senior economist at Japan Research Institute.
"Japan cannot be a drag on the world economy and could come under pressure to act immediately upon any promise," he added.
Both a government source and economists said pressure on Japan to take further steps on its economy could grow, particularly after Tuesday's U.S. credit easing, the first in nearly three years.
The Federal Reserve cut the federal funds rate, which banks charge each other on overnight loans, by 0.25 percentage point to 5.25 percent.
"Half the reason for the U.S. credit easing may have been to stabilize global financial markets, and it is Japan's turn to come up with a solution on its own issues," said Takahashi.
Finance ministers and central bank chiefs from the Group of Seven -- Britain, Canada, France, Germany, Italy, Japan and the United States -- gather in Washington on Saturday.
The meeting is followed by the annual assembly of the International Monetary Fund and the World Bank.
Japan's ruling Liberal Democratic Party and two opposition groups agreed last weekend to temporarily nationalize the struggling Long-Term Credit Bank of Japan and inject funds into banks that merge with ailing banks.