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Japane plans to spend $354 billion in stimulus

Japane plans to spend $354 billion in stimulusJapanese Prime Minister Shinzo Abe announced launching of a stimulus package of more than 28 trillion yen ($354 billion) in an effort to prop up the economy, Kyodo News reported.

The package would be compiled next week, Abe said in his speech in the southern city of Fukuoka on Wednesday.

"We need to take steps to support domestic demand and put the economy on a firmer recovery path," Abe said. "I want to use various measures to increase our escape velocity from deflation."

The plan will include 13 trillion yen in "fiscal measures," without specifying what that meant. Those measures are likely to include spending by national and local governments, as well as loan programs. There was no report of how much of the package would be new spending.

Abe's stimulus plan comes ahead of the Bank of Japan's policy meeting that ends Friday. Economists expect further monetary stimulus from the BOJ. Abe's announcement, pressures the Bank of Japan to match his big spending plan with additional monetary easing at its closely-watched rate review.

Some economists have criticised the idea of a new spending package, saying the heavily indebted nation needs structural economic reforms and deregulation more than updated infrastructure.

There has been a lot of speculation about how large the stimulus would be, and how much new spending it would contain. The Nikkei newspaper reported on Tuesday that the plan would include 6 trillion yen of new spending, although only about 2 trillion yen of that would be in a supplementary budget to be passed this year. The government was discussing supplementary spending of about 3 trillion yen for the current fiscal year.

So next week the parliament will make a decision over the package, where approval is a formality because the ruling coalition has a majority in both houses.
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