(Corrects headline to add “billion”)
TOKYO (Reuters) -Japanese Prime Minister Sanae Takaichi’s cabinet approved a 21.3 trillion yen ($135.40 billion) economic stimulus package on Friday, marking the first major policy initiative under the new leader, who has pledged to pursue expansionary fiscal measures.
The package includes general account outlays of 17.7 trillion yen, far exceeding the previous year’s 13.9 trillion yen and representing the largest stimulus since the COVID pandemic. It will also include 2.7 trillion yen in tax cuts.
Growing concerns about the nation’s worsening fiscal position brought about by Takaichi’s lavish stimulus package have sent the Japanese currency to 10-month lows and super-long government bond yields to record highs.
The package will be funded by an expected rise in overall tax revenue reflecting inflation, as well as an additional issuance of government bonds.
The size of additional government bond issuance has still to be finalised, but is expected to be larger than the 6.69 trillion yen issued for last year’s stimulus, sources familiar with the matter said.
The cabinet plans to approve a supplementary budget to fund the package as early as November 28, aiming to secure parliamentary approval by the end of the year.
($1 = 157.3100 yen)
(Reporting by Makiko Yamazaki; Editing by Stephen Coates)
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