Japanese Prime Minister Naoto Kan’s Cabinet approved a 5.1 trillion yen ($63 billion) stimulus package to fight deflation and combat the stronger yen.
The package will be funded by an extra budget for the year ending March 2011 worth 4.43 trillion yen, with the remainder coming from money made through cost cuts and frontloading of public works projects, according to a document released by the Finance Ministry in Tokyo today.
The government doesn’t plan to issue new bonds to cover the cost of the supplementary budget, an indication it may not sell debt to pay for extra spending for the first time since 1999. The extra budget will be deliberated in parliament.
Separately, the government will make 1.5 trillion yen from the nation’s foreign exchange special account available to the Japan Bank for International Cooperation for overseas investment and infrastructure projects, the Finance Ministry said.
The move reflects Kan’s efforts to win infrastructure projects abroad and take advantage of a stronger yen, which rose to a 15-year high yesterday against the dollar.