In a policy statement delivered here, he declared Asian economic recovery was a prerequisite for political and social stability. He listed the initiatives being undertaken by Japan to boost its economy.

"I am confident that the Japanese economy will surely recover and once again vigorously lead the Asian economy," he said.

Among the Japanese economic measures, he said, were a recently adopted 24 trillion yen ($208.7 billion) stimulus package and special yen loans to help other Asian countries over three years.

A senior foreign ministry official said that the terms of the loans were still undecided, but they would be more generous than yen loans currently in place under Japan's official development assistance programme. These have a 25-30 year maturity with an average annual interest of 2.2 percent.

Obuchi said it was important to build collaborative relations among major countries and he proposed that Japan, China and South Korea should increase dialogue with each other.

Obuchi, scheduled to meet Chinese vice president Hu Jintao and South Korean president Kim Dae-jung later on Wednesday, said:

"In this connection discussions among the three countries on environmental problems and others that are common regional challenges may prove to be the first step towards the formation of a trilateral network of dialogue."