Japan to spend more than US$99 billion in new stimulus

TOKYO - Japanese Prime Minister Taro Aso has ordered more than 10 trillion yen (US$99 billion) in fresh spending to rescue the world's second-biggest economy from its deepest recession since the Second World War.

The figure amounts to more than two per cent of Japan's gross domestic product, Finance Minister Kaoru Yosano told reporters Monday after meeting with Aso.

Yosano said the package is part of the broader international effort to revive the global economy. "These are the instructions I have received (from the prime minister), so I would like to work toward this goal," he said.

Aso revealed last week at the G20 summit in London that he intended to put together a new stimulus package, on top of 12 trillion yen in fiscal steps that the government has implemented since last year.

The latest package will include measures to help contract workers and small businesses, boost regional economies, expand "green" technologies and support elderly care, said Yasunaga Matsuki, a spokesman at the Ministry of Finance.

Officials aim to finalize details of the latest package by Friday and submit the extra budget proposal to parliament soon after, Matsuki said.

Japan has been hit hard by the global slowdown, which has sapped foreign sales of its cars and gadgets. Exporters including Toyota Motor Corp. and Sony Corp. have cut production and jobs, not only in Japan but also in Europe and North America.

In Canada, Toyota and Honda employ thousands of workers at assembly plants in Ontario, which produce vehicles mainly for export to the American market.

Japan's gross domestic product shrank at an alarming 12.1 per cent annual rate in the October-December period.

Data for February showed that industrial production tumbled, household spending fell sharply, and unemployment rose to a three-year high at 4.4 per cent. A central bank survey found confidence among big manufacturers at its lowest point ever.

Since taking office in September, Aso has repeatedly said that restoring Japan's economy is his top priority.

Lawmakers last month passed a record 88.5-trillion-yen budget for the fiscal year that began April 1, which included parts of Aso's two previous stimulus packages.

Officials declined Monday to comment on where they would find extra money, though Aso has said recently that he would turn to issuing bonds if needed. Japan's massive public debt now equals 170 per cent of GDP - the highest level among industrialized economies.

In contrast, the Bank of Japan is not expected to unveil any major moves when it wraps up a two-day policy board meeting Tuesday.

Its key interest rate is already super low at 0.1 per cent. It is also buying commercial paper and corporate bonds to help firms raise funds.