The coalition government of Japan will be injecting the economy with a fresh boost of $92 billion budget to support the sluggish economic growth. The decision was taken in a meeting attended by all the senior officials of the government on Wednesday. This underscores the growing concern among policymakers about the weak economic outlook due to a hike in sales tax and declining global demand.
Economy Minister Yasutoshi Nishimura, on Wednesday, stated at a press conference that
Prime Minister (Shinzo) Abe told us to compile a sizable package to take all possible steps on the economy. We want to craft a strong economic package, taking into account the economic situation, global economy, and damage caused by typhoons, which were larger than last year, so as to get the economy on a solid growth path.
The ruling party appealed to focus the spending on disaster relief that was caused due to a string of hurricanes that hit Japan this year and provide funds to aid farmers to cope with the fallout of the US-Japan trade deal, which opens up a few market segments for US goods. Abe also ordered to disburse stimulus to support the economy after the 2020 Tokyo Olympics.
Analysts are doubtful about the Abe government’s ability to push that big amount into the economy when government debt is twice that of its $5 trillion economy. Also, with an aging population and the strictest labor laws, the infrastructure spending programs will face serious problems in terms of implementation.
During the current fiscal year, which ends in March 2020, the government will be giving out a supplementary budget and it will also be planning out for the next fiscal year’s budget plan in December. This will allow the government a period of 15-months to disburse the funds. Supplementary budgets to the magnitude of above 10 trillion yen have been compiled only four times in the past. Both the budget drafts will take effect only after the approval of the parliament.