Japan preparing $120bn stimulus package to bolster fragile economy

Japan’s economic growth slumped to its weakest in a year in the third quarter. (File/AFP)
Updated 03 December 2019

Japan preparing $120bn stimulus package to bolster fragile economy

  • The package would come to around $120 billion), but that would rise to $230 billion when private-sector and other spending are included
  • The government was considering putting together a large-scale stimulus package with fiscal spending exceeding $92 billion

TOKYO: Japan is preparing an economic stimulus package worth $120 billion to support fragile growth, two government officials with direct knowledge of the matter said on Tuesday, and complicating government efforts to fix public finances.
The spending would be earmarked in a supplementary budget for this fiscal year to next March and an annual budget for the coming fiscal year from April. Both budgets will be compiled later this month, the sources told Reuters, declining to be identified because the package has not been finalized.
The package would come to around 13 trillion yen ($120 billion), but that would rise to 25 trillion yen ($230 billion) when private-sector and other spending are included.
The Nikkei business daily reported on the weekend that the government was considering putting together a large-scale stimulus package with fiscal spending exceeding $92 billion.
Japan’s economic growth slumped to its weakest in a year in the third quarter as soft global demand and the Sino-US trade war hit exports, stoking fears of a recession. Some analysts also worry that a sales tax hike to 10% in October could cool private consumption which has helped cushion weak exports.
Such spending could strain Japan’s coffers — the industrial world’s heaviest public debt burden, which tops more than twice the size of its $5 trillion economy.
Despite the headline size of the stimulus, actual spending would be smaller in the current fiscal year, and economists are not expecting much of a boost.
“We expect this fiscal year’s extra budget to total around 3-4 trillion yen. We should not expect it to substantially push up the GDP growth rate,” said Takuya Hoshino, senior economist at Dai-ichi Life Research Institute.
The 13 trillion yen includes more than 3 trillion yen from fiscal investment and loan programs, as the heavily indebted government seeks to take advantage of low borrowing costs under the Bank of Japan’s negative interest rate policy.
Direct government spending is expected to reach around 7-8 trillion yen, they said.
The government will mobilize construction bonds, unused money from the previous fiscal year’s budget and fiscal investment and loan programs to secure necessary funding, the Nikkei reported on Tuesday.
The spending package won’t involve deficit-covering bond issuance, the Nikkei added.
A final decision on the package could be made as early as Thursday.


Iran’s Petropars developing South Pars gas field after withdrawal of foreign companies

Updated 25 January 2020

Iran’s Petropars developing South Pars gas field after withdrawal of foreign companies

DUBAI: Iran’s Petropars will develop phase 11 of South Pars, the world’s largest gas field, after the withdrawal of French oil major Total and the China National Petroleum Corp (CNPC), Iran’s oil minister was quoted as saying on Saturday.
“Now with the exit of the other two companies from the contract, Petropars has completely taken their place and the development of the first unit of phase 11 of South Pars has been given to this company,” Bijan Zanganeh was quoted as saying by ICANA, the Iranian parliament’s news site.
The offshore field, which Iran calls South Pars and Qatar calls North Field, is shared between Iran and Qatar.