Japan to double direct spending in stimulus

tokyo — Japan’s government is likely to inject six trillion yen ($57 billion) in direct fiscal outlays into the economy over the next few years under a planned stimulus package, double the amount initially planned, the Nikkei newspaper reported on Tuesday.

The Finance Ministry had initially earmarked three trillion yen for direct spending from national and local governments under its draft fiscal stimulus plan. But the amount was doubled on requests for bigger spending by government officials and ruling party lawmakers, the Nikkei said without citing sources.

Finance Minister Taro Aso told reporters the government is still debating the size of stimulus spending but hopes to make a decision soon. A draft plan obtained by Reuters on Tuesday shows spending will focus heavily on infrastructure.

Prime Minister Shinzo Abe, emboldened by a large election victory earlier this month, is gambling on infrastructure spending to revive growth amid disappointment that his reforms have not done enough to improve the economy.

“The prime minister’s instructions are to focus on investment for the future,” Aso said at a press conference.

“We need a bold and comprehensive package, but it will take a little more time to finalise it.”

The size of spending could increase further as the government presents the draft stimulus plan for negotiations with ruling party lawmakers from Tuesday, the Nikkei report said.

The total size of the package, which could be announced as soon as August 2, could exceed 20 trillion yen, the Nikkei said.

To fund part of the package, the government will compile a supplementary budget for the current fiscal year of around two trillion yen, the paper said. The rest will be funded in the budget for the next fiscal year beginning in April 2017, it said.