TOKYO Oct 26 Japan's cabinet approved a 422.6
billion yen ($5.3 billion) economic stimulus package of
subsidies and tax grants on Friday that will tap budget reserves
to avoid selling new debt.
The package is dwarfed by the 90.3 trillion yen national
budget for the fiscal year that started from April, showing the
government has limited resources to increase spending to bolster
a flagging economy.
The stimulus measures will likely be overshadowed by the
fact that Prime Minister Yoshihiko Noda's government has yet to
secure opposition votes to pass a bill that is crucial to
funding this year's budget.
The government will spend 264.3 billion yen on subsidies to
encourage capital expenditure in areas damaged by last year's
nuclear disaster and earthquake, as well as tax grants to help
rural areas combat flooding.
The measures include 105.1 billion yen in subsidies to
promote the use of renewable energy in the household sector, to
support clinical trials for stem cell research and to improve
irrigation for small farms, a statement said.
The government will also spend up to 30 billion yen to
improve training and on-the-job education for part-time
Falling exports, slowing growth in China, and the lingering
impact of Europe's debt crisis has raised concern that Japan
could fall into recession, but large public debt makes it
difficult for Japan to use fiscal policy to pump-prime the
The limited scope of the measures is partly a reflection of
a political stalemate that has slowed policymaking since last
month as the opposition senses it an oust the government if it
forces Noda to call an election.
Legislation needed to sell bonds for this fiscal year's
budget is in limbo due to political gridlock. Without the bill
being passed, the government could run out of money by the end
Japan has already been hit by a string of credit downgrades
because of concerns that it was not doing enough to curb its
debt burden, the world's largest at twice the value of its
annual economic output.