Tokyo: Japanese Prime Minister Shinzo Abe’s government is considering a new economic stimulus package worth 3.5 trillion yen ($29.2 billion, Dh106.9 billion), local media reported on Thursday, in one of his first policy moves since being reappointed as premier.
The package is expected to earmark one trillion yen for the recovery of the disaster-struck regions of north-eastern Japan, which were devastated the earthquake and tsunami in March 2011, Jiji Press reported, without citing any sources.
The government is also likely to allocate 250 billion yen to livelihood support and measures to bolster consumer spending, while 170 billion yen is to be earmarked for measures to counter a declining birth rate, the report said.
Abe, who was sworn in as premier on Wednesday for a third term, said he will “give the highest priority to the economy” after Japan fell into recession.
The economy shrank at an annualised pace of 1.9 per cent in the July-to-September quarter and 6.7 per cent in the April-to-June quarter.
Abe’s cabinet was reportedly to greenlight the stimulus package on Friday, nearly two weeks after his conservative Liberal Democratic Party won a resounding victory in parliamentary elections.
Fiscal reform:
Bank of Japan (BOJ) board members made a rare call on the government to steadily promote measures to restore the country’s tattered finances three weeks after expanding monetary stimulus, minutes of their November meeting showed.
The November rate review was held in the midst of Prime Minister Shinzo Abe’s announcement to postpone a scheduled second sales tax hike next year, after the first tax hike in April pushed the economy into recession.
Abe decided to put off increasing the sales tax despite repeated calls from BOJ Governor Haruhiko Kuroda to go ahead with the two-stage increase to rein in Japan’s public debt which, at twice the size of its economy, is biggest among major industrialised nations.
“Members reaffirmed that it was extremely important to ensure the credibility of fiscal management, and it was for this reason that they expected the government to steadily promote measures aimed at establishing a sustainable fiscal structure,” according to minutes of the BOJ meeting released on Thursday.
One of the two government representatives present at the policy-setting meeting said the government “took seriously” the board members’ view and “acknowledged that it would work to ensure such credibility,” according to the minutes.
At the November. 18-19 meeting, the BOJ kept monetary settings unchanged after having expanded stimulus in October to pre-empt a slowdown in inflation following a slide in oil prices from delaying the achievement of its 2 per cent price target.
The BOJ kept policy steady at a subsequent meeting in December and policymakers hope to stand pat in coming months, pointing to initial signs of recovery in exports and output.
But some analysts expect the central bank may act again in January if slumping oil prices and weak demand force it to cut its rosy price forecasts.
