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Economy

Japan's economic stimulus to surpass $91bn

Concerns over tax hike aftermath and trade war effects fuel plans for fresh spending

In light of the super typhoon in October that left a trail of destruction across eastern Japan, Prime Minister Shinzo Abe has called for stimulus measures to prop up the economy, which has been battered by a string of natural disasters.

TOKYO -- The Japanese government plans to raise its fiscal spending to more than 10 trillion yen ($91 billion) in economic measures that will be finalized in early December, Nikkei has learned.

The government will support corporate productivity and personal consumption through large-scale economic measures amid growing uncertainty about the future of the economy.

Some 5-6 trillion yen will be allocated to the general account of the revised budget plan for 2019 fiscal year and the original budget plan for 2020. The government also plans to utilize its Fiscal Investment and Loan Program and foreign exchange special accounts, which are non-tax revenues, to secure funds.

A package of more than 12 trillion yen is being discussed within the government. The final decision will be made in consultation with the ruling party at the beginning of the week. The ruling party has called for 10 trillion yen in direct government expenditures, and the scale may further increase, depending on the discussions.

The total bill, including from local governments, private financial institutions and companies, is expected to exceed 20 trillion yen. The previous economic measures launched in August 2016 were 13.5 trillion yen in fiscal spending and 28.1 trillion yen in total.

The government plans to secure about 8 trillion yen in national and local spending. The national expenses, mainly composed of general account and special account, are expected to be around 7 trillion yen.

Of the general account, public investment is expected to be around 3-4 trillion yen. Construction bonds will be issued as financial resources. A major focus will be flood control measures after the damage caused by a typhoon in October.

Uncertainties inside and outside the country, such as concerns over cooling consumption caused by the consumption tax hike, U.S.-China trade friction and Brexit, are increasing. The spending is a response to lackluster demand both domestically and externally.

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