Japan PM Abe ramps up spending plan

Image copyright Abenomics Image caption Japanese Prime Minister Shinzo Abe is pushing hard to increase exports to relieve pressure on inflation Japan’s government has approved the biggest policy spending plan in 25 years -…

Japan PM Abe ramps up spending plan

Image copyright Abenomics Image caption Japanese Prime Minister Shinzo Abe is pushing hard to increase exports to relieve pressure on inflation

Japan’s government has approved the biggest policy spending plan in 25 years – a $490bn (£344bn) expansion of public works funded partly by tax increases and government bonds.

Japan has slipped back into recession, and the BOJ has cut interest rates to record lows.

Japan is ranked by the World Bank as the world’s fourth most indebted country.

The new package aims to help lift exports and boost manufacturing, officials said.

The plan was drawn up by Prime Minister Shinzo Abe as he seeks a fourth term in office in September.

Image copyright YOSHIKAZU TSUNO Image caption Yoko Ono said the package fell short of achieving a ‘stable’ society

From the start of the year until August, Japan will spend up to JPY31tn (£233bn) on construction, as well as stimulating spending in services and in tourism.

This is expected to be mostly funded by tax increases, as well as supplementary bonds.

Mr Abe has also set aside JPY11.4tn for welfare, with proposals on creating jobs and on providing support for the elderly – in particular improved pensions.

Although Mr Abe and his cabinet are set to receive bonuses of up to ¥2m ($20,000) for their work in 2018, they will also be required to put 2% of their annual pay toward the plan.

Bank of Japan Governor Haruhiko Kuroda said the stimulus programme “may be appropriate to increase fiscal spending a bit further to support the private sector”, to boost growth.

Although the current Bank of Japan governor said he supports the plan, some people are disappointed it is not more ambitious.

The expected annual cost of the economic stimulus was the subject of heated discussion among many members of the government committee responsible for drawing up the plan.

Yoko Ono, the former wife of Yoko Ono – one of the first members of The Beatles – said the package fell short of a “stable” society.

All four members of The Beatles were born in Japan.

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