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The government Tuesday announced a ¥7.2 trillion emergency stimulus package, some 2.7 times more than the originally planned ¥2.7 trillion, to buoy the Japanese economy. Apart from the rather questionable economic impact of the package, confusion in the Cabinet and lack of leadership on the part of Prime Minister Yukio Hatoyama during its compilation have left people uneasy about the government’s ability to tackle the difficult economic situation.

The package is expected to have a ripple effect worth ¥24.4 trillion because of such measures as expanding the guarantee for emergency loans for small and midsize enterprises from ¥30 trillion to ¥36 trillion. It will earmark some ¥800 billion for environment-related measures, including extension of incentives for the purchase of environmentally friendly cars and other products, and some ¥600 billion for improving the employment situation. But many of the package’s measures have been carried over from the previous administration.

Some ¥3 trillion will be given to local governments. But this is just for making up for grants-in-aid losses caused by falls in tax revenue. Some ¥500 billion will be used for small public works such as burying power lines undergrounds, repairing roads and bridges and increasing urban greenery. But their stimulative effect on the economy is expected to be small.

In view of the harsh economic conditions and requests from junior coalition partners — the People’s New Party and the Social Democratic Party — the government last week expanded the package’s size to ¥7.1 trillion but could not hold a meeting Friday of Cabinet ministers concerned because Mr. Shizuka Kamei, the PNP leader and minister in charge of financial issues, called for an ¥8 trillion package and boycotted the meeting. Mr. Hatoyama did not try to persuade him to attend.

The government eventually appeased the PNP and the SDP by adding ¥100 billion. As Japan faces a large drop in tax revenues, deflationary pressure and the strong yen, the Cabinet’s show of unity and earnestness is imperative in tiding over the current economic difficulty.

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