Global Biz
Japan govt endorses $61.3b stimulus plan
(Xinhua)
Updated: 2010-10-08 15:32
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TOKYO - Japanese Prime Minister Naoto Kan's Cabinet on Friday approved an emergency stimulus plan to the tune of 5.1 trillion yen ($61.3 billion) in a bid to boost the nation's economic recovery by combating persistent deflation and a surging yen, whilst supporting local governments and small businesses.
The package is significantly more than the 4.8 trillion yen proposed by Kan's ruling Democratic Party of Japan (DPJ), due to the rucking party's coalition member, the pro-spending People's New Party, insisting the budget be upped.
Specifically, the government spending aims to increase the nation's real gross domestic product by 0.6 percent and has set the creation of between 450,000 to 500,000 new jobs as one of its immediate targets to help drive the economy forward.
In addition, the package will seek to strengthen social welfare by making further provisions for child-rearing, nursing care and other such areas.
Public works projects and a number of measures to bolster small businesses in Japan are also central to the government's plans.
Kan's government will seek approval for the extra funding needed for the package from the Diet later this month, although political insiders inferred Friday that the ruling Democratic Party of Japan (DPJ) may face resistance from opposition parties and potentially struggle to win enough support to pass the bill smoothly through the less powerful Upper House of parliament.
The coalition has agreed however that new bonds will not be issued to finance the new stimulus package.
The Cabinet's approval of the new stimulus plan Friday shows the government's proactive stance towards taking all necessary measures to boost the nation's economy and separately, the Japanese government said Friday it would continue to intervene in foreign exchange markets when deemed necessary.
Japanese Finance Minister Yoshihiko Noda vowed Friday that the government would take "decisive action, including intervention, if necessary," to curb yen strength, after the dollar fell to a fresh 15-year low of 82.11 yen on Thursday.
Noda's comments came on the eve of a Group of Seven (G7) meeting where tensions over competitive currency devaluation will be at the top of the agenda and likely cause further global friction.
"Japan's stance on foreign exchange issues will not change either before or after the (G7) meeting."
Japan intervened on Sept 15 by selling its currency for the first time in more than six years to stem the yen's rise.
Japan relies on a relatively weak yen to boost the competitiveness of its exports which lead Japan's economy. When the yen is strong, Japanese exports become less attractive in global markets and Japanese firms see their profits eroded when repatriated.