Japanese Prime Minister Shinzo Abe's Cabinet on Thursday approved a JPY 5.46 trillion (USD 53.3 billion) extra budget for the current fiscal year to finance a stimulus package aimed at easing the impact of the planned sales tax increase in April. The supplementary budget for fiscal 2013 through March 31, endorsed at a Cabinet meeting, does not require an issuance of additional bonds.
Of the total, about JPY 3.13 trillion (USD 30.5 billion), the biggest portion of the budget, will be used for reconstruction work in areas affected by the March 2011 quake-tsunami disaster and disaster-prevention measures throughout the country, including JPY 80.5 billion (USD 780 million) to decontaminate areas around the tsunami-crippled Fukushima Daiichi nuclear power plant. JPY 1.42 trillion (USD 13.8 billion) is earmarked for measures to promote industrial competitiveness, including new infrastructure investment by enterprises ahead of Tokyo 2020 Summer Olympic Games. About JPY 650 billion (USD 6.3 billion) will fund cash payments to low income earners and subsidies for home buyers. According to the Cabinet office, the stimulus measures are expected to boost Japan's gross domestic product (GDP) by 1 percent and create at least 250,000 jobs.
Last week, the Cabinet announced a JPY 5.3 trillion (USD 51.7 billion) economic stimulus package, amid growing concern that sales tax hike, from the current 5 percent to 8 percent in April, will cause negative impact to the world's third-largest economy. Including spending by central and local governments, and the private sector, the fresh stimulus package is expected to be worth JPY 18.6 trillion (USD 181.3 billion).
It is Prime Minister Shinzo Abe's second stimulus package, following a JPY 13.1 trillion (USD 127.7 billion) extra budget compiled in January in order to increase GDP by about 2 percentage points and creating about 600,000 jobs. The government is also scheduled to draw up the initial budget for fiscal 2014 late this month.