Japan is contemplating the allocation of 13.9 trillion yen from its general account to fund a fresh stimulus package, as revealed in a government document examined by Reuters. This move is aimed at lessening the effects of spiking prices on households and is set to surpass the 13.2 trillion yen earmarked for the previous year's economic stimulus endeavor, thereby deepening Japan's already stretched public finances, given its debt load that is presently double the size of its economy.
The proposed package encompasses approximately 8 trillion yen designated for government investment and lending, as well as local government spending, bringing the total package to 39 trillion yen when private funding is factored in. The figures detailed in the document have also been corroborated by three other sources from the government and ruling party who opted to remain anonymous due to the sensitive nature of the matter not being public knowledge. Included in the stimulus package is a provision for 30,000 yen ($193) to be distributed to low-income households exempt from residential taxes, alongside an allocation of 20,000 yen per child for households with dependent family members, as disclosed by sources familiar with the situation.
Challenges regarding the stimulus package were surmounted on Wednesday after Japan's ruling coalition arrived at an agreement with a key opposition party on the package's draft. However, doubts have been raised about the necessity of a package of this magnitude at this juncture, with some experts pointing out positive indicators of growth in private consumption and real wage increments. As highlighted by Takayuki Sueyoshi, a senior economist at Daiwa Institute of Research, achieving Japan's target of attaining a primary budget surplus in the upcoming fiscal year could now become a formidable task.