The only place with ‘stimulus’ proposals???
And, they recognize that ‘stimulus’ fights the weak yen???
Maybe been reading my blog???
This could be a game changer for Japan?
Stimulus the new ‘currency war’ weapon of choice?
Cabinet OKs Extra Budget To Cover Y5tln Stimulus
TOKYO (Kyodo)–The Cabinet approved Tuesday a draft supplementary budget for fiscal 2010 to partly finance an additional stimulus package worth some 5 trillion yen that aims to fight the impact of the recent strength of the yen and kick-start the deflation-plagued economy.
The budget plan, which will be submitted to the Diet on Friday for deliberations, includes expenditure of 4,429.2 billion yen. Prime Minister Naoto Kan, who has championed the restoration of the country’s fiscal health, the worst among major industrialized nations, has refused to issue any new government bonds for the extra budget.
The government instead plans to finance the budget with surpluses carried over from the fiscal 2009 budget, funds available due to lower-than-expected interest payments on its debt as well as greater-than-projected tax revenues for fiscal 2010. It would be the first time in 11 years for Japan not to issue any new debt for the creation of an extra budget to finance a stimulus package.
”We drafted the budget after listening to opposition parties. I think there is enough possibility that they will agree with us,” Finance Minister Yoshihiko Noda told reporters after the Cabinet meeting.
Kan has been forced into careful maneuvering in the Diet after the ruling alliance lost a majority in the House of Councillors in an election in the summer.
The latest stimulus is the second in a series following a 918 billion yen package approved last month, and highlights Kan’s strong resolve to prevent the Japanese economy from falling into a recession amid high unemployment, falling prices, weakening exports and sliding industrial output.
The yen has risen to its highest level against the U.S. dollar in more than 15 years despite the government intervening in the market last month for the first time in over six years. The strength of the Japanese currency has negatively affected the country’s export-oriented economy.
The new stimulus package, revealed earlier this month, focuses on boosting domestic demand while improving the business environment. The extra budget would cover 3,070.6 billion yen in spending to revitalize regional economies, develop infrastructure and offer financial support to small and medium-sized companies.
The 1,123.9 billion yen portion would go to upgrading medical and social welfare services. The government is also earmarking 336.9 billion yen to accelerate economic growth through such measures as securing overseas energy and mineral resources, as well as 319.9 billion yen to help young people find jobs by giving incentives to employers.
From an operational standpoint, what use is this from the article:
“[…]for the first time in 11 years for Japan not to issue any new debt for the creation of an extra budget to finance a stimulus package.”
From what I’ve learned on your site, it seems this would mean that any fiscal stimulus on behalf of the govt would be absorbed by the BoJ’s debt auctions, so the net result would be zero. Am I getting this right, or is the author just misinformed?
i’d need to go back and read it. probably just going to let clearing balances (reserves) build, but not sure.
“The government instead plans to finance the budget with surpluses carried over from the fiscal 2009 budget, funds available due to lower-than-expected interest payments on its debt as well as greater-than-projected tax revenues for fiscal 2010.”
Seems like they’re just using their surplus to pay for this new spending. It’s interesting that part of this surplus is due to lower than expected interest payments since the BOJ controls these interest rates.
right, seems they ‘borrowed extra’ last year and those funds are sitting in the MOF’s account, which functionally is meaningless apart from extending maturities on govt yen liabilities.
In any case it’s only $61 bln or little over 1% Japan’s GDP. How is that such a “game changer?”