TOKYO - Japan unveiled a 2 trillion yen, or $18 billion, stimulus package Friday, including assistance to small businesses and other pump-priming measures to shore up its flagging economy hit by soaring energy and material prices.
The new measures include discounts on expressway tolls, assistance to farms and help for part-time workers to find better jobs, according to the Cabinet Office. Funds were also earmarked for better medical care, ecological technology, housing loans and education, it said.
Growth in the world’s No. 2 economy has come to a virtual halt against the backdrop of higher energy and materials prices, slowing exports and the global credit crunch.
Second-quarter gross domestic product, which contracted at a 2.4 percent annual pace, suggests that the country teeters on the brink of recession.
All told, the value of the programs involved comes to 11.7 trillion yen ($107.5 billion). Aside from the $18 billion in cash infusion, most of the package consists of non-spending measures such as lower road tolls and loans to businesses.
Friday’s package also did not include tax breaks, but they will be considered as a future measure during this fiscal year through March 2009, the government said.
A major reason for cautious public spending is the nation’s massive public debt.
Critics see the stimulus package as a publicity stunt by the unpopular Prime Minister Yasuo Fukuda to revive approval ratings for his Cabinet.
“This is just reckless spending,” Yukio Hatoyama, leader of the main opposition Democratic Party, said on nationally televised news. “The package is aimed at getting voters’ attention in anticipation of the next election.” Fukuda is being seen by some as reversing the tightening of spending and economic reforms by former Prime Minister Junichiro Koizumi who ended his five-year term last year.
Public discontent against Fukuda has been growing following a series of scandals, including lost pension records, bribery in the military and dubious spending by the agriculture minister.
But Fukuda said Japan will not resort to issuing debt-covering bonds for the latest package.
In releasing its economic stimulus plan, the government said that the Japanese economy had been sorely hurt by the global rise in oil and food prices as well as by US credit problems, raising serious concerns that Japanese consumer spending will decline further and drag down people’s living standards. - AP