Japanese Finance Minister Fukushiro Nukaga on Sunday ruled out any plan to introduce a stimulus package or tax cuts despite growing calls for concerted efforts to help combat a US mortgage crisis.
"Fiscal stimulus or tax cuts used to be called for when our economy deteriorated, but we are not in a situation that we need to use a conventional, knee-jerk approach," Nukaga said in an interview with TV Asahi.
"We have to adapt ourselves to the present situation," he said.
On Saturday, Japan hosted a meeting of the Group of Seven financial chiefs as they confirmed a slowdown in the global economy in the wake of the US subprime loan woes. In a statement, the G7 members called on themselves to take "appropriate actions, individually and collectively, in order to secure stability and growth in our economies." US Treasury Secretary Henry Paulson also said Japan and China, whose giant economies depend on exports to the US market, should continue to focus on spurring growth at home. "Japan and China, we like to see more reliance on domestic demand," he told a news conference following the one-day meeting, where he explained about US measures such as rate cuts and a stimulus package. "What this country needs in my judgement is continued reforms to drive and to enhance long-term growth and there has always been heavy reliance on exports, and not as much as on domestic demand," he added.
Replying to the request, Nukaga only said that Tokyo's imminent task was to pass a national budget for the new fiscal year starting in April 1, saying: "The budget includes various measures."
Nukaga, moreover, called on Washington to concentrate on its own efforts to subdue the mortgage crisis. "The epicentre of the subprime loan problem is in the United States," Nukaga said. "The United States has to resolve the problem by itself." In a separate television interview, fiscal policy minister Hiroko Ota said the government aimed to revive ailing domestic demand by helping to boost wages and stimulate the job market.
"The weak point of the Japanese economy right now is domestic demand," Ota told public broadcaster NHK. Analysts, however, say there is a limit to economic measures Japan can take as its interest rates stand at just 0.5 percent while the government is weighed down by huge national debts.
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