Japan Government to Finalize Stimulus Package Next Month

Economic and fiscal policy minister Akira Amari on Tuesday urged ministries and agencies to cooperate in finalizing by early December an economic stimulus package aimed at easing the negative impact of a planned sales tax hike next year.

“The new economic package would be aimed at preventing the consumption tax hike from hurting the economy and at bringing the economy back to a growth path as soon as possible,” Amari said at a press conference.

The package — the key pillars of which are strengthening industrial competitiveness and making infrastructure more resilient to natural disasters — would be worth 6 trillion yen, including 1 trillion yen in tax cuts to invigorate business investment, Amari said.

To fund the stimulus package, an extra budget for this fiscal year through March 2014 is expected to be compiled in mid-December.

Amari said Prime Minister Shinzo Abe’s government, which has pledged to promote fiscal rehabilitation, has no plan to issue additional bonds in fiscal 2013, as tax revenues are likely to grow on the back of the nascent economic recovery.

“I believe it would be possible (to finance the package) without issuance of new government debt,” Amari said.

The stimulus package would entail steps such as employment support for young people and women, as well as subsidies for smaller firms to accelerate reconstruction in areas ravaged by the March 2011 disaster, government officials said.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza