A government-owned lender may be allowed to purchase stakes in companies that are struggling to raise funds as the economy deteriorates, according to a proposal by the Ministry of Economy, Trade and Industry.
Under the program to be submitted to the Cabinet next month, the Development Bank of Japan will buy preferred and common shares in companies, METI said Tuesday. The government will guarantee a portion of the investments should the companies go bankrupt, it said.
The initiative may help businesses whose earnings are falling and borrowing costs are rising as global demand for Japanese goods plummets. Exports dropped an unprecedented 35 percent in December, deepening the economic contraction that the Bank of Japan says will become the steepest in the postwar era.