Nikkei Reports Japanese Stimulus to be Lower than Expected

Japan looks to inject 6 trillion yen ($56.7 billion) in direct fiscal outlays into the economy over the next few years, double the amount initially planned.

The fiscal stimulus package, to be funded through a supplementary budget, the fiscal 2017 spending plan and other lending facilities, will be announced as early as Aug. 2.

The Ministry of Finance firmed up the plan on Monday. An earlier draft presented to Prime Minister Shinzo Abe included 3 trillion yen in central and local government spending, but the amount was doubled in light of calls for more generous spending from the government and ruling party lawmakers.

Funding will come in several stages. The supplementary budget for fiscal 2016 will likely provide around 2 trillion yen, including 1.3 trillion yen or so for public works. The fiscal 2017 national budget will set aside more. The overall package, including loans to businesses, could exceed 20 trillion yen.

The plan covers four areas. Policies aimed at maximizing labor participation are first on the list. This includes an overhaul of Japan’s employment system, such as instituting limits on overtime work and longer parental leave. Employees will also be able to draw pensions after fewer years at a company.

via Nikkei

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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