Abe Fiscal Plan Is Said to Include About 7 Tln Yen in Spending

  • Cabinet is due to look at the fiscal stimulus next week
  • A further 6 trillion yen seen as funds for state-run firms

About one quarter of Japanese Prime Minister Shinzo Abe’s new 28 trillion yen ($267 billion) economic stimulus includes actual spending, according to a person familiar with the matter.

The person, who asked not to be named as the discussions are private, didn’t specify the period of time over which the 7 trillion yen would be spent. The money will be part of 13 trillion yen of "fiscal measures," with the rest of that sum covered by so-called zaito financing that’s used to raise money for projects at state-run companies, according to the person. The remaining 15 trillion yen in Abe’s total package is unclear; he has yet to offer a breakdown on the plan.

Investors have been looking for details of the stimulus measure such as how much of it will be new spending before the Bank of Japan ends its policy meeting on Friday, with economists expecting further monetary stimulus. The Nikkei newspaper reported earlier on Thursday that more than 6 trillion yen will be actual spending. Abe said the cabinet will review the overall plan next week.

Expectations for fiscal and monetary stimulus have been rising as a slowdown in overseas demand and the yen’s surge this year are making the nation’s products less attractive overseas and hurting the earnings of exporters. Waning corporate profits may weigh on wage growth and household income, complicating the government’s attempts to revive the economy.

To read why the Abe stimulus isn’t as big as it first appears, click here.

For economists’ projections for the BOJ decision on Friday, click here.

For a QuickTake Q&A explaining Japan’s elusive inflation target, click here.

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