Business

Tuesday April 7, 2009

Japan plans US$100bstimulus package


New move adds to earlier measures worth US$119b

TOKYO: The Japanese government plans to unveil a new economic stimulus package including spending of at least US$100bil on Friday, the finance minister said, as the country grapples with its worst recession since World War Two.

The package, which adds to 12 trillion yen (US$119bil) in spending planned under previously announced stimulus measures, comes as Bank of Japan policymakers debate the need for additional steps to support the flagging economy at a two-day rate review ending today.

“The prime minister has instructed us to compile measures that would include real spending of more than 2% of GDP as we take into account a fall in our economy, which is bigger than that in other leading nations, as well as the need for international cooperation,” Finance Minister Kaoru Yosano told reporters yesterday.

Among the steps to be included are the creation of a safety net for workers who do not have the status of “permanent” staff, measures to help corporate financing, and increased spending on solar power systems, he said.

Yosano did not explain how the new spending would be funded, saying there was no discussion on issuance of new bonds in his meeting with Prime Minister Taro Aso yesterday.

Financial markets have been jittery about Japan’s snowballing public debt due to a slew of stimulus packages.

“As there have been calls for increased government spending to offset the gap between falling demand and excessive supply, the amount of stimulus spending could rise further,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

”Until there is a more clear idea of how the new stimulus package will impact government debt, market players will remain cautious about buying bonds.”

Tokyo already plans to issue 33 trillion yen in new bonds to fund its biggest-ever budget for the fiscal year that began on April 1, which does not include the new stimulus. – Reuters


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