Japan's government hopes stimulus to push up GDP by 0.7%

Japan's Finance Minister Taro Aso (second from right) talks with Japan's Prime Minister Shinzo Abe (second from left) and ruling Liberal Democratic Party lawmaker Shigeru Ishiba (left) at the Lower House of the Parliament in Tokyo Dec 24, 2014. Japan
Japan's Finance Minister Taro Aso (second from right) talks with Japan's Prime Minister Shinzo Abe (second from left) and ruling Liberal Democratic Party lawmaker Shigeru Ishiba (left) at the Lower House of the Parliament in Tokyo Dec 24, 2014. Japan's government approved on Saturday stimulus spending worth 3.5 trillion yen (S$38 billion) aimed at helping the country's lagging regions and households with subsidies, merchandise vouchers and other steps, which it hopes will boost GDP by 0.7 per cent. -- PHOTO: REUTERS 

TOKYO (REUTERS) - Japan's government approved on Saturday stimulus spending worth 3.5 trillion yen (S$38 billion) aimed at helping the country's lagging regions and households with subsidies, merchandise vouchers and other steps, which it hopes will boost GDP by 0.7 per cent.

The package was unveiled two weeks after a massive election victory by Prime Minister Shinzo Abe's ruling coalition gave him a fresh mandate to push through his "Abenomics" stimulus policies.

Given Japan's dire public finances, the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenue that has exceeded budget forecasts due to economic recovery.