Japan may double direct stimulus spending to 6tril yen

TOKYO: Japan’s government is likely to inject six trillion yen (RM232.56 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 yesterday.

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, said the Nikkei without citing sources.

Finance Minister Taro Aso told reporters the government was still debating the size of stimulus spending but hoped to make a decision soon. A draft plan obtained yesterday showed spending would 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,” said Aso.

“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 yesterday, said the Nikkei report.

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

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

The draft spending plan obtained by Reuters showed details of the stimulus package, which expands loan guarantees and lowers lending rates on funding schemes for smalland medium companies.