Japanese Government Eyeing $188 Billion Stimulus Package

The Japanese government is arranging to compile a stimulus package of at least 20 trillion yen ($188 billion) to help the domestic economy emerge from deflation and fend off possible adverse effects of Brexit, sources close to the matter said Wednesday.

The government initially envisaged compiling a stimulus package of somewhat more than 10 trillion yen. But the size is likely to double as the package will now include projects for fiscal 2017 and beyond and increase “zaito” low-interest government loans by 6 trillion yen, the sources said.

There is also a possibility the size of the package and public expenditure may increase even further, depending on agreements between the government and the ruling coalition of the Liberal Democratic Party and Komeito party, the sources said.

The government of Prime Minister Shinzo Abe will seek Cabinet approval for the stimulus measures in early August, with part of the package expected to be financed by a supplementary budget for fiscal 2016 to be compiled this fall.

In the stimulus package, the government plans to earmark around 8.3 trillion yen for building and improving infrastructure. That sum includes 3 trillion yen for extending to Osaka a magnetically levitated train line now planned to run from Tokyo to Nagoya.

To contain financial instability stemming from the Britain’s vote last month to leave the European Union, the government plans to lend its dollar funds to companies, the sources said. To cope with repercussions from Brexit, the government will provide 3 trillion yen from its foreign exchange reserves to the state-backed Japan Bank for International Cooperation, which will extend low cost funds to Japanese companies.

via Mainichi

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

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