Japan to Announce Oil-Relief Plan Soon, Yosano Says

By Kyoko Shimodoi and Jason Clenfield

Aug. 4 (Bloomberg) -- Japan's government plans to announce additional measures to help households and companies cope with rising energy costs, newly appointed Economic and Fiscal Policy Minister Kaoru Yosano said.

``The prime minister is extremely concerned about the economy,'' Yosano told reporters in Tokyo today after Yasuo Fukuda urged him to come up with a relief plan as soon as possible. Yosano said he'll produce an outline before the nation's ``obon'' summer holidays begin next week.

The move is the latest by Fukuda to shore up the economy and his popularity after he appointed Yosano and Finance Minister Bunmei Ibuki in a Cabinet reshuffle last week. Rising food and fuel costs sent household confidence to a record low in June and prompted fishermen to go on strike last month.

Yosano said he and Fukuda didn't discuss whether an extra budget would be required to fund the measures. The ability to provide additional spending is limited because Japan has public debt that may be as high as 1.8 times the economy's annual output, according to the Organization for Economic Cooperation and Development.

``We're trying to come up with a plan in the midst of very difficult circumstances,'' Yosano said.

The government in December allocated 215 billion yen ($2 billion) until March 2009 for oil relief. Crude oil has climbed 31 percent this year, and gasoline reached a record last month.

``The possibility of a supplementary budget is increasing,'' said Mamoru Yamazaki, chief Japan economist at RBS Securities Japan Ltd. in Tokyo. An extra budget would also cover earthquake reconstruction and probably wouldn't exceed 2 trillion yen, Yamazaki said.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net.