The Japan External Trade Organization New York (JETRO NY) released a newsletter today analyzing the new economic reform program adopted this morning by the government of Japanese Prime Minister Junichiro Koizumi. It can be viewed at:

http://www.jetro.org/newyork/focusnewsletter/focus16.html.

Japanese Cabinet Adopts New Economic Reform Program

To initiate the technological innovation and "creative destruction" needed to propel economic growth in Japan, a comprehensive framework has been adopted to promote a rebirth of the Japanese economy. This new policy package will help to transfer human and material resources from inefficient to high-growth sectors.

The coming two to three years will stand out as a period of concentrated adjustment in the Japanese economy. Japan must therefore satisfy itself with low economic growth rates during this time. The resolution of non-performing loans and the implementation of structural reforms will be pursued as an integrated package during this period.

Thereafter, Japan will move to realize economic growth led by private sector demand. Against this backdrop, fiscal reform measures will be introduced assuring steady progress to achieve primary balance surpluses so that the government will not have to rely on new borrowing to finance expenditures other than the servicing of past debt. In pursuing this line of action, careful attention will be paid to macroeconomic trends and developments.

Outline of Economic/Fiscal Management and Structural Reform Initiatives

Japan's new economic program contains a wide range of measures to promote:

• Structural Reform and Economic Revitalization
• Improvement of Social Infrastructure for the New Century -- Pursuing Greater Effectiveness and Efficiency
• Reform of the Social Security System -- Promoting Security and Stability in Peoples' Lives
• Competition Among Unique Local Governments -- Enhanced Autonomy in National and Local Government Relations

  New Economic/Fiscal Policies and Reform of the Policy Process

In addition, the new program outlines basic principles of the Government of Japan's FY2002 budget. This includes a commitment to keep the volume of government bond issues below (Y)30 trillion and to introduce measures to minimize any increase in unemployment due to the expected impact of the disposal of non-performing loans.

Focus is published and disseminated by JETRO New York, 1221 Avenue of the Americas, New York, NY 10020 in coordination with KWR International, Inc. 140 West End Avenue, New York, NY 10023 Tel: 212-532-3005, Fax: 212-799-0517, E-mail: kwrintl@kwrintl.com. JETRO New York is registered as an agent of the Japan External Trade Organization, Tokyo, Japan and KWR International, Inc. is registered on behalf of JETRO New York. This material is filed with the Department of Justice where the required registration statement is available for public viewing.

CONTACT: JETRO NY
Satoshi Miyamoto, 212/997-0416
Executive Director
Fax: 212/997-0464
E-mail: miyamotosatoshi@jetro.go.jp