The economic situation warrants no optimism on its future course. The ruling and major opposition parties, which have finished their presidential elections, are turning attention to the Diet dissolution and a snap election rather than policies. The political stalemate could facilitate an economic downturn, possibly unraveling the scenario to restore fiscal health, including a consumption tax increase. Japan Center for Economic Research (JCER) makes urgent policy proposals to contain the immediate risk of economic recession while aiming for strategic fiscal management over the medium term. Ahead of the 2012 Annual Meetings of the International Monetary Fund and the World Bank Group to be started in Tokyo on Oct. 9, we also propose frameworks which will help arrest the yen’s appreciation and stabilize the financial system.