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TOKYO, Dec 8 (Reuters) - 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:
-- 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.
-- Japan is experiencing mild deflation and while the economy is expected to gradually pick up, the foundation for growth is weak.
-- 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)