Bangkok has unveiled a long-term plan to clean-up government debts related to a financial sector bailout and prices fall further in Hong Kong. The Thai government and the independent Bank of Thailand are joining forces to repay massive debts incurred during the 1997 financial crisis.
The liabilities, which total about $33 billion, stem from the rescue of the country's financial sector.
Under the plan, new bonds, worth more than $18 billion, will be issued over the next four years. The government will pay interest on the bonds from future budgets, while the central bank will redeem the principal through future profits from its currency reserves.
In Japan, a key government panel has adopted a new fiscal policy package recommending a cut in corporate taxes and doing away with some income tax exemptions.
Economy Minister Heizo Takenaka says the committee proposal is a detailed economic recovery and tax reform plan. He says that after implementation, the next step will be to evaluate progress.
This is the second economic revitalization package under the 15-month old Junichiro Koizumi Administration.
The grip of deflation is intensifying in Hong Kong. The government says prices fell in May, marking the forty-third month of decline. The consumer price index fell an annualized 3.0 percent. Economists say climbing unemployment has hurt consumer demand, forcing retailers to slash prices. The city's jobless rate rose to a record 7.4 percent in the three months to May.
On the bright side, economists say there are signs that exports have bottomed out, and they predict improving overseas demand will create more jobs and help curb deflation.
Hong Kong stock market players are awaiting the initial public offering of the territory's arm of state giant Bank of China. Sources involved with the deal say it will launch next month on the Hong Kong Stock Exchange and could raise as much as $3 billion. It would be the city's largest stock sale this year.