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Abenomics Leaves Japan’s Hinterland Behind as Cuts Bite: Economy

Japanese Prime Minister Shinzo Abe’s cuts to local-government subsidies are like trying to “wring water from an old rag that’s been squeezed dry,” says Kazuya Yoshida, a 27-year veteran of Shijonawate City municipal staff.

Abe pared payments to local authorities by 392 billion yen ($3.9 billion), or 2.3 percent, deepening decade-long cutbacks for city and prefectural budgets hurt by falling populations and dwindling revenues. While Abe has deployed fiscal stimulus at the national level to revive Japan’s economy, a drop in wages for provincial civil servants risks prolonging deflation.