(For more stories on the Japanese economy, click [ID:nECONJP])
TOKYO Dec 8 Japan's ruling coalition compiled an
$81 billion economic stimulus budget as it tries to avoid a
return to recession, but fresh spending falls short of a cure for
an economy dependent on exports and suffering from deflation and
a strong yen. [ID:nTOE5B701F]
Following are key points of the stimulus package:
TOTAL SIZE, DEBT ISSUANCE
-- Spending totals 7.2 trillion yen ($81 billion), about 1.5
percent of gross domestic product. Including non-spending
measures such as loan guarantees for small companies facing tight
credit conditions, the package totals 24.4 trillion yen.
-- The government will issue new bonds worth more than 100
billion yen to fund the stimulus measures. New bond issuance for
the fiscal year ending in March 2010 is expected to reach a
record 53 trillion yen, up 20 percent from its initial estimate.
GOVT VIEW ON ECONOMY, RISKS
-- Japan is experiencing mild deflation and while the economy
is expected to gradually pick up, the foundation for growth is
-- Excessive volatility and disorderly moves in currency
rates would do serious harm to the economy. The government will
therefore carefully monitor exchange-rate moves.
-- The government and the Bank of Japan agree on the need to
overcome deflation, and will work together to ensure an economic
recovery. The government hopes the BOJ will support the economy
with appropriate and flexible monetary policy.
-- A low-interest mortgage programme for homeowners taking
out fresh loans from a state-backed lender.
-- Incentives for new houses built, or existing homes
renovated, using energy-efficient technology.
-- Extend by six months, until September next year, subsidies
for energy-efficient cars.
-- Extend by nine months, until December next year,
incentives for energy-efficient air conditioners, refrigerators
and television sets.
-- Ease requirements companies must meet to apply for
subsidies aimed at helping them maintain jobs.
-- Extending and expanding a government safety net to ease
funding constraints for cash-strapped smaller firms.
-- Steps aimed at cutting borrowing costs for companies
making long-term capital expenditure.
(Reporting by Leika Kihara)