The Japanese government is planning direct fiscal spending of around 7 trillion yen ($67 billion) to help fund an economic stimulus package totalling more than 28 trillion yen, two people briefed on the matter told Reuters on Thursday.That amount – at just a quarter of the total package – could disappoint some market players bracing for bigger outlays given the massive headline figure, equal to more than 5 percent of gross domestic product.
The total package, to be approved by Prime Minister Shinzo Abe’s cabinet next Tuesday, also includes 6 trillion yen for a fiscal loan and investment programme aimed at spurring private-sector spending such as for construction of a “maglev” train line, the sources said. They spoke on condition of anonymity because the plan has not been finalised.
The remaining 15 trillion yen will come from quasi-government financial institutions that provide loans, loan guarantees and subsidies to private-sector firms, they said.
Following a big election victory this month, Abe instructed his government to craft a stimulus to revive an economy dogged by weak consumption and investment despite three years of his “Abenomics” mix of hyper-easy monetary policy, spending and promised reforms. ($1 = 105.0700 yen)