Don't miss




Melania’s jacket: What did it mean?

Read more


South Sudan peace deal attempt fails as Kiir rejects Machar

Read more


Zero Tolerance: Does Border Security Trump Compassion?

Read more


Let's become French!

Read more


Taking sides: The dual-nationality footballers playing at the World Cup

Read more


Dior trots out Cruise collection at Chantilly stables

Read more


France's Pelagos sanctuary, a haven for whales and dolphins

Read more

#THE 51%

Developing a code of their own: Are women leading the tech revolution in Paris?

Read more

#TECH 24

Motorsport innovation

Read more


Cabinet approves new $61.3 billion stimulus package

Video by Nathalie TOURRET


Latest update : 2010-10-08

Japan's cabinet approved a new stimulus package worth 61.3 billion dollars on Friday, the second stimulus plan since June. Premier Naoto Kan (pictured) must win opposition support for the plan when it arrives in parliament for approval.

AFP - Japan's cabinet on Friday approved a new emergency stimulus package worth 61.3 billion dollars to help shore up an economy hit hard by deflation and the impact of a strong yen.

The 5.05 trillion yen plan will be financed by an extra budget, which the government is trying to finalise by the end of this month.

But the fate of the package and the budget will hang on Prime Minister Naoto Kan's ability to muster the support of opposition lawmakers to pass them through parliament, given the ruling party's lack of a clear majority.

The stimulus is the Kan administration's second since it came to power in June and includes job programmes, welfare spending and programmes for small businesses and infrastructure.

It also includes provisions to find new sources of rare earth minerals used in high tech components for cars and computers after Japan said China disrupted shipments following a territorial dispute.

If passed, the package is expected to give a boost to Japan's gross domestic product of as much as 0.6 percent while helping to safeguard jobs.

The measure follows a move by the Bank of Japan on Tuesday to adopt a near zero-rate policy and new pump-priming measures in a bid to spur growth, beat deflation and address the impact of the surging yen on the economy.

"The government is providing its support just as the Bank of Japan has taken monetary easing steps," Japanese Economy Minister Banri Kaieda told reporters.

"Furthermore we will continue to cultivate green shoots that will lead to our growth strategies and nurture their growth," he said of efforts to help growth areas and small business.

The ruling Democratic Party of Japan has aggressively approached opposition lawmakers to muster enough support to pass the budget through the Diet.

The DPJ has a majority in the lower house but needs support of opposition parties in the upper house for swift passage of the budget bill.

Key opposition party New Komeito has agreed to side with the ruling party, after Kan openly courted the Buddhist-backed group, according to media reports.

The government in September approved a 915 billion yen stimulus package financed by reserve funds to create around 200,000 jobs and lift the country's GDP by about 0.3 percent, but that was criticised as not being enough.

Japan's export-led recovery has shown signs of slowing recently. Exports expanded at their slowest pace this year in August, amid falling overseas demand, while consumer prices continue to drop.

The strong yen has hurt Japan's exporters, making their goods more expensive and eroding overseas profits when repatriated.

A strong domestic currency also makes imports cheaper, helping prolong a damaging deflationary cycle where consumers hold off on purchases in the hope of further price drops, clouding future corporate investment.

The dollar was trading at 82.36 yen in Tokyo midday, unchanged from New York late Thursday but slightly up from the new 15-year low of 82.11 it hit earlier in the day.

Japan intervened in currency markets in September and has repeatedly warned it is ready to do so again despite growing worries over a global race to guide currencies lower to help exports.

News of the stimulus plan failed to lift sentiment on Tokyo's benchmark Nikkei index Friday, with shares falling 0.48 percent in afternoon trade.


Date created : 2010-10-08


    New PM warns nation is at risk of Greek-style economic collapse

    Read more


    Bank of Japan unveils 33 billion dollar loan scheme

    Read more


    Japan takes rare step to curb rising yen

    Read more