The government said Friday it will spend ¥915 billion on its fresh stimulus package to grapple with the recent upsurge of the yen and downside risks to economic growth by creating 200,000 jobs and encouraging consumer and business spending.
The package, expected to boost gross domestic product by about 0.3 percent in inflation-adjusted terms, was approved by the Cabinet of Prime Minister Naoto Kan earlier in the day.
The government said it “will take decisive actions, including (market) intervention, when necessary” to stem the yen’s rise against other major currencies while expressing hope that the Bank of Japan will take “additional necessary policy responses to beat deflation in close collaboration with the government.”
The yen has risen to levels unseen in 15 years against the dollar, which fell to the ¥83 level this week, causing a negative impact on business sentiment, especially among exporters.
Without newly issuing government bonds, Kan will tap some ¥920 billion in reserve funds for the current fiscal 2010 budget to finance the emergency policies. The Cabinet Office said that whether the government drafts a supplementary budget will depend on future developments of the economy.
Kan has said he will make maximum efforts to improve employment conditions, with the package specifying that the government help young people find jobs by giving financial incentives to companies that could offer employment.
The package aims to encourage job creation in sectors with growth potential, such as nursing and medical care as well as the environment, energy and tourism.