The government on Monday unveiled an outline of a stimulus package to help the economy out of its downtrend amid rising oil prices and a global slowdown due to the U.S. subprime crisis.
But it did not include how much money the government will provide and which financial resources it will use — the key points of the package — saying such details will be announced at the end of the month.
“It is the mission of our Cabinet to take quick and decisive measures to ease the pain and anxiety of the public,” Prime Minister Yasuo Fukuda said at the beginning of a meeting with Cabinet ministers and ruling party executives.
The package will focus on reducing public concerns on inflation. Among policies under consideration are measures to support temporary workers, fund schools to become earthquake-proof and reinforce measures on food safety, the government said.
It will include measures to help businesses “adapt” to rising prices of oil and other materials.
Financial support to boost energy efficient technologies and promote energy efficient and long-life housing are also key measures in the package.
Economic and fiscal policy minister Kaoru Yosano said the government will go after the double objectives of boosting the economy while tightening spending to reduce government debt.
“The economic stimulus package will be relatively moderate but with a certain amount of scale,” said Yosano, who is in charge of compiling the package.
Despite calls from Taro Aso, secretary general of the ruling Liberal Democratic Party, to shelve the government’s target for a budget surplus on a primary balance basis in fiscal 2011, Yosano said the government remains committed to that goal.
“We will implement the economic stimulus measures while maintaining the 2011 target,” he said.
But economists are skeptical the stimulus package will boost the economy.
Many steps that the government is considering for the package aim to solve structural problems, such as measures to tackle inflation, the troubles in the public pension system and surging energy prices, rather than short-term measures, said Koichi Haji, chief economist at NLI Research Institute.
“It doesn’t seem like it will have an immediate impact on the economy,” Haji said.
Saddled with a mounting budgetary deficit, the government can no longer use large sums of fiscal spending for public works projects, as it did in the 1990s, and has limited ways at its disposal to shore up the economy efficiently, he said.
However, in the current situation, the government had to announce some economic measures, Haji said.
“Otherwise, Fukuda would be criticized for not having any policy. . . . It would be a very narrow way for Fukuda to go on, if he really wants to keep a tight fiscal policy,” he said.
Last week, the LDP and New Komeito, its junior coalition partner, separately compiled measures to stimulate the economy, which analysts say has entered a recession.
The LDP called on the government to offer financial aid to industries such as agriculture, trucking and construction which have been dealt a heavy blow by rising fuel costs. It also called for slashing highway toll costs.