JAPANESE EXPECTED TO ADOPT AMBITIOUS ECONOMIC PACKAGE

JAPANESE EXPECTED TO ADOPT AMBITIOUS ECONOMIC PACKAGE

The Miyazawa cabinet was expected today to adopt a multibillion-dollar pump- priming package in an attempt to spur Japan's sagging economy.

Government officials said Thursday that the package may include prompt public works spending, promotion of capital investments for expanded factory automation, measures for stimulating plant and equipment expenditures and provisions for encouraging low-interest loans by the Japan Development Bank and the Small Business Finance Corp.But they conceded it is possible that some of these measures could be delayed until a second package that the Miyazawa administration is considering for April, following parliamentary approval of the fiscal 1992 budget.

Officials say these measures are necessary for Japan to achieve the government's goal of 3.5 percent economic growth in the fiscal year ending March 1993, officials say.

They expect the second package to be more comprehensive than the one scheduled to be announced today. In April's package, for example, the government is expected to press the nation's largest corporations to place most of their orders for new plant and equipment during the April-September period.

There is a strong possibility that one of the pump-priming efforts will be accompanied by a 0.5 percent reduction in the official discount rate, which now stands at 4.5 percent after being lowered three times since last July.

The country's most prominent business, political, industrial and labor leaders, worried by the faltering economy, over the past two weeks have been repeatedly demanding another drop in the preferential rate that the Bank of Japan charges the nation's biggest commercial banking institutions.

One well-known economic analyst said in Tokyo that at no time in his long observation of business conditions has he seen so many Japanese leaders joining together to press the central bank for action of this sort.

"Usually the call comes from three or four quarters at the most, not one after another over a period of weeks and even days as we have seen," he remarked.

Up until now, however, top officials of the central bank have declined to drop the benchmark rate. They contend employment, consumer spending and capital expenditures have remained relatively strong and that the economy is not not likely to stall.

There were also fears within the Bank of Japan that another reduction in the rate might bring with it runaway inflation and a possible return to the nation's "bubble economy" of the late 1980s.

Toshihiko Fukui, one of the central bank's executive directors, told officials of the ruling Liberal Democratic Party this week that he expects the economy to begin picking up around the middle of this calendar year when inventory adjustments by the country's major corporations will have been completed.

Japan's political and business leaders nevertheless continued to insist that the central bank should immediately slash the discount rate by a full 1 percent, or at the very least by 0.75 percent, since they feel rates on the money market do not now reflect the prevailing economic situation.

Usually well-informed analysts tended to agree that the daily pressures on Yasushi Mieno, Bank of Japan Governor, are mounting to such an intense level that he will shortly be forced to give in and lower the rate despite his conviction that another drop is entirely unnecessary and possibly unwise.