Japan Stimulus Plan Includes Business Support to Revive Economy

Japan’s new government will set up schemes worth nearly $5 billion to boost businesses, including helping them buy foreign companies, according to a draft economic stimulus package seen by Reuters on Monday that could be approved later this week.

Prime Minister Shinzo Abe has made reviving the economy his top priority after his Liberal Democratic Party (LDP) won elections last month, combining aggressive monetary easing with fiscal spending to encourage investment and spur growth.

His spending promises have raised concerns Japan’s public debt burden, already the worst among major economies, could deteriorate further, and some economists say structural reforms might have a bigger impact after years of stop-start growth.

The Development Bank of Japan (DBJ), a state-backed lender, will administer a 150 billion yen ($1.7 billion) lending scheme to encourage firms to develop new technologies and collaborate on new business lines, the draft showed.

The stimulus package would also establish a 200 billion yen fund with the Japan Bank for International Cooperation (JBIC), another state-sponsored lender, to encourage foreign mergers and takeovers.

It also includes 83 billion yen in loan guarantees and low-interest-rate loans for small firms, the draft showed.

A LDP sub-committee approved the draft on Monday, and it could be approved by the Cabinet as soon as this week.

via CNBC

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