Japan needs $100 bln stimulus package -govt panel

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TOKYO, April 7 (Reuters) - Japan needs to spend 10 trillion yen ($100 billion) in a new stimulus package to prop up a faltering economy mired in its worst postwar recession, the government's top economic policy panel said on Tuesday.

The proposal echoes Prime Minister Taro Aso's instruction to Finance Minister Kaoru Yosano on Monday to compile economic measures that would include real government spending of more than 2 percent of GDP, amounting to around 10 trillion yen. [ID:nT345059]

The government's economic policy is in line with recommendations from the panel, the Council on Economic and Fiscal Policy, which is chaired by the prime minister and includes senior cabinet members.

The panel's four private-sector advisers, including Toyota Motor Corp Chairman Fujio Cho, said implementation of the new stimulus package should start in July-September at the latest.

The panel also urged the government to put priority on measures that can have tangible positive impact on the economy in 2010.

On specifics, the panel members said the government should provide a safety net for households facing financial difficulties. They also called for investment in infrastructure that would raise the efficiency of economic activity.

The new stimulus package, which is expected to be announced on Friday, adds to 12 trillion yen in spending planned under already announced stimulus measures since last August.

But heightened fears of an economic free-fall after the nation's gross domestic product for October-December tumbled at a pace unseen in 35 years prompted ruling parties to seek additional steps. The world's No.2 economy has been more severely hit by the global recession than other major economies due to its heavy dependence on exports, which have nearly halved from a year earlier in recent months. [ID:nT316314]

Discussions over the new economic steps also come as British Prime Minister Gordon Brown said at the London summit of the Group of 20 rich nations and major emerging economies last week that governments have pledged $5 trillion of public stimulus by the end of next year. [ID:nL1230573] ($1=100.60 Yen) (Reporting by Yuzo Saeki; Editing by Michael Watson)