Japan preparing $253b stimulus, actual govt spending less than half that: Sources

A general view shows a construction site at Tokyo's bay area Ariake on June 8.
A general view shows a construction site at Tokyo's bay area Ariake on June 8.PHOTO: AFP

TOKYO (REUTERS) - The Japanese government is preparing a package of economic stimulus measures totalling 20 trillion yen (S$253.43 bilion) or more, though actual government spending is likely to be less than half that amount, sources involved in the process said on Thursday (July 21).

The package will have a headline figure of at least 20 trillion yen, the three sources told Reuters, marking the upper end of current market expectations. But they said direct spending from the national and local governments was on track to be something over 3 trillion yen, with some 6 trillion yen coming from the Fiscal Investment and Loan Programme, which is off the general budget.

Prime Minister Shinzo Abe, fresh off a national election victory, last week instructed his government to compile the measures by the end of the month to revive a flagging economy in the face of sluggish private consumption and investment.

The stimulus - which Mr Abe promised after telling a May summit of the Group of Seven industrial powers that efforts were needed to preempt a global recession - will include speeding up the completion of maglev train networks as part of a stimulus package to support the economy.

The package could expand, the sources said, during negotiations between the parties in Mr Abe's ruling coalition before his cabinet approves the measures on Aug. 2.