Japan’s new PM preparing large economic stimulus to tackle inflation: sources
Add BT as a preferred source
[TOKYO] Japan’s new Prime Minister Sanae Takaichi is preparing an economic stimulus package that is likely to exceed last year’s US$92 billion to help households tackle inflation, government sources familiar with the plan said on Wednesday.
The package of more than 13.9 trillion yen (S$120 billion) marks Takaichi’s first major economic initiative since the advocate of big fiscal spending took office on Tuesday, reflecting her commitment to what she calls “responsible proactive fiscal policy.”
It will be built around three main pillars: measures to counter inflation, investment in growth industries, and national security, the sources said, declining to be identified because the matter is still private.
Japan’s Nikkei share gauge erased losses and turned higher on Wednesday afternoon following the Reuters report, while the yen pared morning gains and was little changed.
As part of its core inflation relief measures, the Takaichi administration plans to swiftly abolish the provisional petrol tax rate.
It also aims to expand local government grants, with a focus on supporting small and medium-sized companies that are unable to benefit from existing tax incentives for wage hikes.
The package will also include investments in growth sectors such as artificial intelligence and semiconductors as the government focuses on strategic economic development.
The exact scale of the package is still being finalised, the sources said. It could be announced as early as next month.
To fund the measures, the government is moving ahead with drafting a supplementary budget for the current financial year through March, with an eye toward passing it during the upcoming extraordinary parliament session.
If additional spending exceeds initial expectations, the government may need to issue deficit-covering bonds, raising questions about how to balance economic growth with fiscal discipline. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
TRENDING NOW
Extra S$300 in CDC Vouchers, U-Save rebates for households as part of S$900 million support package
Singtel explores Nasdaq-SGX dual listing for data centre arm Nxera, local data centre Reit
Singapore banks’ battle for wealth talent goes beyond private bankers
Singapore rolls out S$900 million support package for businesses, households in light of Iran war
