The compilation of a ¥3.4 trillion stimulus package to prop up the economy is nearly finished, sources close to the matter said Thursday.
The planned package is much smaller than the one devised to cushion the blow from the first stage of the consumption tax hike in April, which tipped Japan back into recession. Now the economy is plagued by weak domestic demand and rising costs for imports like oil, natural gas and raw materials caused by the weakening of the yen under Prime Minister Shinzo Abe’s deflation-fighting program, dubbed “Abenomics.”
Abe’s Cabinet is expected to approve the economic package on Dec. 27, and a bill on Jan. 9 providing a supplementary budget of about ¥3.1 trillion to fund it, the sources said.
Passage of the budget bill is projected for early next year.
One of the main pillars of the package is more than ¥200 billion in new subsidies destined for municipal offices, of which ¥100 billion is to be spent on measures to revitalize regional economies feeding on the crumbs of the nation’s major cities. These include programs to lure people to more provincial areas and promote employment there.
The other ¥100 billion is to be used to boost consumption, such as by helping municipal offices issue regional merchandise coupons and supplement fuel subsidies.
The package is also expected to include a program offering subsidies to rice farmers who achieve cost cuts in fiscal 2015 amounting to several tens of thousands of yen per hectare.
The second stage of the tax hike has meanwhile been postponed. It is due to complete the doubling of the consumption tax to 10 percent in 2017.