Japan to Draw Up Stimulus Package, Eyes Additional Bond Issue

Tokyo, July 12 (Jiji Press)--Japanese Prime Minister Shinzo Abe instructed Economic and Fiscal Policy Minister Nobuteru Ishihara and other relevant ministers on Tuesday to draw up a large-scale stimulus package by the end of this month to shore up the economy and beat the country's stubborn deflation, following the ruling bloc's victory in Sunday's House of Councillors election. In his instructions, Abe said, "The comprehensive and bold stimulus package will be designed to help accelerate investment in the future while promoting structural reforms." He also pointed to risks to the global economy, including Britain's decision to leave the European Union in a historic national referendum last month. For the stimulus package, seen to be worth over 10 trillion yen, the government is considering additionally issuing so-called construction bonds, informed sources said. The envisioned scale would be the largest since a 15.4-trillion-yen package adopted in response to the 2008 global financial crisis. Meanwhile, a midyear decision to increase annual government bond issues would be the first since January 2013. "It's possible that we will issue construction bonds (for public works projects), but it's not desirable to issue deficit-covering bonds for a supplementary government budget," Ishihara said at a press conference. The government plans to submit a second supplementary budget for fiscal 2016 to an extraordinary Diet session, to be convened in September. The government aims to maintain its fiscal reconstruction goal for fiscal 2020. The stimulus package is expected to call for using the government's "zaito" fiscal investment and loan scheme to move up the full opening of Central Japan Railway Co.'s <9022> magnetic levitation high-speed train line between Tokyo and Osaka by up to eight years from the currently planned 2045 and to expand the conventional Shinkansen bullet train network. The government also plans to promote the development of export-related infrastructure to meet its target of raising the country's annual exports of agriculture, forestry and fishery products, and food items to one trillion yen as early as possible. In 2015, such exports totaled 745 billion yen. The package is also expected to include measures to strengthen the tourism industry, such as improving ports to accept cruise ships, and support for the construction and renovations of hotels, in order to boost the number of annual visitors from abroad to 40 million. Among other possible measures are a cut in the premium-paying period required for receiving pension benefits and an expansion of interest-free scholarships. END