Japan to Double Direct Spending in Stimulus Package: Nikkei

By Leika Kihara and Stanley White

TOKYO – Japan’s government is set to inject 6 trillion yen (approximately $57 billion) into the economy over the coming years as part of a planned stimulus package, doubling the initially proposed amount, according to reports.

Initially, the Finance Ministry had allocated 3 trillion yen for direct spending by national and local governments in its draft fiscal stimulus plan. However, government officials and ruling party lawmakers requested an increase, leading to the revised figure.

Finance Minister Taro Aso mentioned that discussions are ongoing regarding the total size of the stimulus spending, with hopes for a decision soon. A draft plan reviewed indicates that the spending will prioritize infrastructure projects.

Prime Minister Shinzo Abe, gaining confidence from a recent electoral victory, is counting on infrastructure investment to spur economic growth amid dissatisfaction with the effectiveness of previous reforms.

"The prime minister has instructed us to prioritize future investment," Aso stated at a press conference. "We require a bold and comprehensive package, though finalizing it will take some additional time."

As discussions continue with ruling party lawmakers, the total size of the proposed package may be further increased. An announcement could potentially come as early as August 2, with estimates suggesting the package may surpass 20 trillion yen.

To finance part of the initiative, the government intends to create a supplementary budget of about 2 trillion yen for the current fiscal year, with additional funding designated for the next fiscal year beginning in April 2017.

DIRECT AND INDIRECT SUPPORT

The draft spending plan outlines various aspects of the stimulus package, including expanded loan guarantees and reduced lending rates to aid small and medium-sized enterprises.

The Japan Bank for International Cooperation plans to support small companies abroad through lending schemes, addressing concerns stemming from the UK’s exit from the European Union, which could impact credit availability.

The government aims to utilize public-private investments to expedite the construction of a maglev train line by up to eight years and enhance the existing bullet train network.

Additionally, investments will be made in hotels and improvements to public transportation systems to accommodate the anticipated increase in tourists ahead of the 2020 Tokyo Olympics.

Infrastructure spending will also focus on boosting agricultural exports and reinforcing facilities in regions prone to natural disasters.

The stimulus package is expected to include salary increases for workers in daycare centers and elderly care facilities, which are facing challenges in attracting sufficient staff to meet rising demand.

Furthermore, the draft proposes stricter enforcement of labor laws to address wage disparities between regular and part-time employees performing identical roles.