TOKYO – The government of Japan approved on Thursday its first stimulus package in three years, worth 26 trillion yen (nearly $240 billion), aimed at boosting economic growth and strengthen infrastructure to deal with natural disasters.
Around half of the package would be released as public spending, including low-interest loans by the state for reinforcing infrastructures and incentives to prevent a sharp drop in public works spending after the Tokyo 2020 Olympic and Paralympic Games.
Prime Minister Shinzo Abe said in a meeting with cabinet members and leaders of his coalition partner Komeito party that the government had prepared a “powerful” package to overcome the risks of an economic slowdown.
The package is also aimed at supporting reconstruction work after the natural disasters that struck the country recently, offering protection against the negative effects of a hike in value added tax that was implemented on Oct. 1 and checking the effects of a possible slowdown in the world economy.
Around 6 trillion yen would be used for public works projects to help in reconstruction after the damage caused by typhoons Faxai (September) and Hagibis (October), apart from other natural calamities.
The two storms caused record rainfall in some areas of the country and killed around 100 people, besides causing significant damage to houses and infrastructure.
The package includes government measures to boost the export of agricultural products before a bilateral trade deal between Japan and the United States comes into effect early next year.
This is the first economic stimulus in three years, after a 28.1 trillion yen package in August 2016.
Some economists have said the package could slow down efforts to improve the fiscal health of the country, which is burdened with the largest public debt among the industrial nations.
The stimulus package would be funded through an additional budget for the ongoing financial year 2019-20, with the budget draft set to be prepared in December.