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Reports Say Nakasone Plans to See Reagan in April for Economic Talks

February 24, 1987|SAM JAMESON | Times Staff Writer

TOKYO — Prime Minister Yasuhiro Nakasone was reported today to be preparing to visit Washington in late April to assure President Reagan and Congress that Japan will take forceful steps to stimulate economic growth at home and increase Japan's imports.

The report, in the newspaper Yomiuri, came as the Tokyo Foreign Exchange Market gave a vote of confidence to a weekend agreement in Paris to stabilize the world's leading currencies near their present levels. There was no substantial change in the relative value of the dollar, which closed at 153.55 yen against Friday's 153.77.

Yomiuri said Nakasone, with the trip to Washington in mind, has already instructed his Economic Planning Agency to draw up forceful measures to stimulate growth. It said the prime minister hopes to address a joint meeting of Congress to declare his intention of fulfilling "Japan's responsibility" as a nation with trade surpluses.

A source close to Nakasone confirmed that the prime minister is planning such a trip.

At the weekend meetings in Paris, attended by the finance chiefs of the United States, Britain, West Germany, Canada, France and Japan, Finance Minister Kiichi Miyazawa promised new measures to spur domestic demand and draw in more imports, a promise that Treasury Secretary James A. Baker III had sought in exchange for an agreement "to foster (exchange rate) stability around current levels."

Miyazawa, returning to Japan on Monday, refused to elaborate, saying, "Until the budget is approved, I can't say anything about new economic measures."

Debate in Parliament has been halted since late January by an opposition boycott to protest Nakasone's plans to implement a value-added sales tax next Jan. 1 in exchange for personal and corporate income tax cuts this year. Final action on the budget may not come until late April.

Asked at a news conference if the financial leaders had agreed in Paris to joint intervention in currency markets, if necessary, to stabilize exchange rates, Miyazawa replied: "We did discuss specifically what cooperation would be taken. The kind of thing that happened in January will not be permitted." This was a reference to a 6% spurt in the yen's value in the first three weeks of the year.

Miyazawa refused to specify what change in exchange rates might precipitate intervention. But other Finance Ministry officials told Japanese reporters that the United States, West Germany and Japan had agreed to take the lead in intervening if the yen breaks out of a range between 150 and 160 to the U.S. dollar.

The two figures, respectively, represent a 61% and a 51% appreciation of the yen compared to the rate of September, 1985, when financial leaders of the United States, Britain, West Germany, France and Japan agreed to drive down the dollar's value.

Miyazawa indicated that he expects the yen to weaken somewhat. "We can expect fundamentals in the American economy to improve and the exchange markets to reflect such a change," he said.

Packaging a set of new economic measures to stimulate the economy threatened to overturn a 7-year-old policy of budget retrenchment adopted by Prime Minister Zenko Suzuki in 198O and continued by Nakasone when he took office in 1982. Economists and businessmen agreed that, without an end to the belt-tightening measures, no effective means to promote Japan's domestic growth could be found.

The effect on imports of any new measures also remained in doubt. Because of Japan's export-oriented economic structure, domestic growth stimulates imports to a lesser degree than in the United States. According to Shinji Fukagawa, vice minister of the Ministry of International Trade and Industry, U.S. imports increase at a rate of 2.3 times the rate of growth in the gross national product, while Japanese imports increase at a rate of only 74% of such growth.

Stabilization of the yen was seen by business leaders here as the single most effective method to stimulate corporate profits, which would result in additional growth.

"With instability in exchange markets, no management outlook can be formed," said Sugiichiro Watari, president of Toshiba.

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