“Premier Liu gave the directive while meeting with senior economic and financial officials to discuss strategies to tame inflation and boost consumer confidence,” said Chu Yun-peng, a Cabinet minister without portfolio.

Chu told a news conference after the meeting that Vice Premier Chiu Cheng-hsiung will serve as convener of the new panel tasked with fleshing out effective measures to revitalize the local economy, which showed signs of slowdown in May according to the latest Council of Economic Planning and Development report on economic indicators.

Monitoring indicators flash a yellow-blue light, indicating a slowdown, for the first time since June 2007,

According to Chu, the panel will hold its first meeting today to draw up a comprehensive blueprint to prop up the sagging economy.

At the emergency meeting chaired by Liu, it was decided that five measures will be adopted to stabilize the local stock market, including encouraging the four public investment funds controlled by the government to enter the stock market and purchase blue-chip shares with low price-earning ratios and high dividends.

Other steps include adopting measures to attract overseas mutual fund managers to buy Taiwan stocks, pushing listed companies to implement treasury stock systems to encourage share buybacks, working out new tactics to attract inbound investments, and luring overseas Taiwanese businesspeople to return to Taiwan to invest and help create jobs, Chu said.

On stimulating economic development, Chu said five measures will be taken.

They will include offering easy and low-interest loans for local enterprises to replace their energy-consuming production facilities; providing new incentives to accelerate private investments; working out incentives to boost private consumption; offering new incentives to encourage electricity conservation, and speeding up the relaxation of various financial and banking restrictions.

With the prospect of stagflation mounting as oil prices soar while consumption stagnates, Premier Liu also ordered the formation of a special panel to help disadvantaged families.

This panel headed by Cabinet Minister Tsai Hsung-hsiung will design a mechanism to identify “near poor” families bordering the poverty line.

Relevant government agencies will pool resources to offer them assistance in terms of the impact of spikes in food and fuel prices, Chu explained.

He added that the panel will also craft a tax subsidy system for middle- and low-income wage earners.

Asked whether the government is likely to offer food coupons or tax rebates to help disadvantaged households tide over inflationary pressure, Chu said no concrete plans are available at the moment.

As to whether the government will review the existing “poverty line” criteria, Chu said the Ministry of the Interior will study feasible measures, including the feasibility of identifying “near poor” families in terms of tax data.

“The Cabinet will unveil complete economy stimulus measures and strategies to help poor families in the shortest possible period of time,” Chu added.

The officials agreed that the current problems faced by Taiwan were mostly induced by problems abroad, but the administration should maintain the free market policy that will interact closely with the world communities.

Liu called the emergency meeting after the local bourse plummeted again yesterday despite a series of encouraging developments, including the imminent launch of direct weekend charter flights with China and the incoming Chinese tourists.

Taiwan’s benchmark share price index fell 263.04 points, or 3.37 percent, following a plunge of 358.41, 3.03 percent to close at 11,453.42 by Dow Jones industrial average in New York on Thursday.

Officials attending the impromptu gathering included Minister of Economic Affairs Yiin Chii-ming, Minister of Finance Li Sush-der, Central Bank of China Governor Perng Fai-nan, Minister of the Interior Liao Liou-yi, Council for Economic Planning and Development Chairman Chen Tain-jy and ministers without portfolio Tsai Hsung-hsiung and Chu Yun-peng, according to government spokeswoman Vanessa Y.P. Shih.