Tokyo, Oct 26 (Calcutta Tube/DPA) Japanese Prime Minister Naoto Kan‘s cabinet approved a 5.09-trillion-yen ($62.9 billion) stimulus package Tuesday to address the yen’s rise and counter deflation.
The government aims to spur domestic demand, improve the business environment and revitalise regional economies with the package, which includes public works projects.
The government must still gain approval from parliament of some 4.43 trillion yen to cover most of the cost of the stimulus through an extra budget for this financial year ending March 2011. The government is not expected to issue new government bonds to cover the extra budget.
Falling prices have been a major concern for Japan, suggesting persistent deflationary pressure in the country.
The yen hit a fresh 15-year high of 80.41 yen to the dollar Monday. On Sep 15, the yen first touched a 15-year high against the dollar, prompting Japan to sell off yen for the first time in six years.
A stronger yen has a negative impact on Japanese exporters as it makes exports less competitive and erodes overseas earnings when revenues are repatriated.