'Government plan' will cause tiny companies to fail

The swift "write-off of bad loans", the Koizumi Cabinet's top priority, will force small- and- medium-sized businesses to go bust on a scale of ten-trillion-yen in the next year, a Japanese Communist Party representative stated in parliament.

Daimon Mikishi gave this warning at the House of Councilors Budget Committee on May 29.

Daimon pointed out that the "government plan" to further accelerate the disposal of non-performing loans will oblige major banks to clean up bad loans amounting to about ten trillion yen in order to cut their remaining debts by half by the next fiscal year.

Now that the disposal of bad loans to large corporations is almost done, the next target will be small- and- medium-sized businesses, said Daimon.

He said that the banks receiving public funds to rebuild themselves are likely to raise their lending rates in order to repay the money to the state, which in turn will increase the number of smaller businesses going bankrupt.

Stating, "The task now is to achieve a recovery of the real economy. Banks must improve their financial position on their own," Daimon demanded a halt to the speed-up of write-offs of bad loans. (end)