TOKYO • Japan is preparing an economic stimulus package worth 13 trillion yen (S$163 billion) to support fragile economic growth, two government officials with direct knowledge of the matter said yesterday, complicating government efforts to fix public finances.
The spending will 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 finalised.
While the package will come to around 13 trillion yen, that will rise to 25 trillion yen when private sector and other spending is included.
But the spending could strain the industrial world's heaviest public debt burden, which tops more than twice the size of Japan's US$5 trillion (S$6.8 trillion) economy.
And despite the headline size of the stimulus, actual spending will 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 three trillion to four trillion yen. We should not expect it to substantially push up the GDP (gross domestic product) growth rate," said Dai-ichi Life Research Institute senior economist Takuya Hoshino.
Public broadcaster NHK said the 13 trillion yen includes more than three trillion yen from fiscal investment and loan programmes, 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 seven trillion to eight trillion yen.
Sources of funding the big spending remain unclear.
A final decision on the package could be made as early as tomorrow, NHK said.