Japanese gov't approves $80.6 bln stimulus package
The Japanese government on Tuesday unveiled a new economic stimulus package that includes 7.2 trillion yen (80.60 billion U.S. dollars) in spending, to fortify the economy against a return to recession.
The delayed announcement, which was due on last Friday, came after much debate between the three-party coalition government as to exactly how much should be spent on the package.
People's New Party chief and Banking Minister Shizuka Kamei strongly urged that the package be much larger than 7.1 trillion yen proposed last week by Democratic Party of Japan (DPJ) lawmakers to their junior coalition partners.
DPJ officials, following resolute pressure from the People's New Party for greater expenditure, decided to up the final figure to 7.2 trillion yen, to accommodate Kamei and the People's New Party -- despite the party's diminutive stature, according to sources close to the matter.
A preemptive strike against a double-dip recession occurring ahead of the upper house elections in mid-2010, as the yen strengthens and mild deflation grips the economy, has also been cited as reasons for increasing the amount of the stimulus package.
The 7.2 trillion yen stimulus package includes costs to make up for possible shortfalls of around 3 trillion yen in tax receipts for local governments, according to lawmakers and is likely to entail actual fiscal spending of around 4 trillion yen.
The package is focused on improving employment conditions, corporate financing of small and midsize firms and the elevation of consumption in the private sector by making provisions for the increased purchasing of environmentally friendly products.
The additional stimulus measures will be financed by the upcoming second extra budget for the year through March 31, according to government officials who said the previous administration's extra funds will be "unfrozen."
However, Finance Minister Hirohisa Fujii, when asked where the extra money for the package would come from, told reporters on Tuesday that the government may issue construction bonds, instead of issuing new debt-covering bonds.
Contrastingly, Japan's fiscal law stipulates that construction bonds be sold only for public works, such as the construction of new roads, bridges and their maintenance.
As a recent slew of governmental reports, providing key economic gauges and data for Japan's economy, indicate that Japanese exports have slowed, expansion weakened, industrial production declined along with wages and consumer prices, the Japanese government's rescue package is very timely indeed, according to a number of economists.