Japan plans to commit $127 billion towards crisis lending to business

The Japanese government has plans to allocate up to ¥10 trillion ($127 billion) towards crisis lending to help businesses tide over the challenges of day-to-day operations and repair damage from the deadly earthquake and tsunami, according a report in the Nikkei newspaper today. 

The newspaper said the government could provide special financing by way of low-interest loans or interest payment subsidies backed by public funds following economic instability triggered by natural disasters.

Without citing any sources, the newspaper said the government was considering allocating several trillion yen - up to ¥10 trillion  - to the scheme. An emergency budget would also be set up for the scheme.

According to analysts, the government would certainly need extra budget to fund disaster relief and reconstruction in the wake of the triple blow of a massive 9.0 magnitude earthquake, a tsunami coupled with a dangerous radiation leak at a quake-battered nuclear plant.

Meanwhile, the authorities continue to struggle to contain the nuclear crisis, even as the government has yet to produce an estimate of how much government spending would be needed to put the economy back on track.

According to economics minister Kaoru Yosano who spoke to Reuters earlier this week, the economic damage from the disaster would exceed ¥20 trillion yen, the projected economic impact of the 1995 Kobe earthquake.