Japan PM orders economic stimulus

Japan's prime minister instructed his ministers Wednesday to plan for an economic stimulus reportedly worth up to 1.0 trillion yen (US$12.7 billion) as an election hovers into view. Yoshihiko Noda called an extraordinary Cabinet meeting and ordered the stimulus, Economy Minister Seiji Maehara said, adding that the package will not require the issuance of new deficit-covering bonds. "The prime minister instructed me to take the lead in compiling the stimulus," Maehara told a news conference. "At this point, issuing new Japanese government bonds is not among the conditions for the stimulus." The minister declined to elaborate on the size of the stimulus package but said the package will include measures to take advantage of the strong yen. The mass-circulation daily Yomiuri Shimbun reported that the size of the package will be up to 1.0 trillion yen. The cash is likely to be used for measures to boost energy and environment-related industries as well as agriculture, forestry and fisheries, and for rebuilding regions hit by last year's massive tsunami disaster, it said. As the stimulus will be financed with discretionary reserves from the current fiscal year budget, it will not need parliamentary approval, the paper said. The influential daily Asahi Shimbun noted the usual route of stimulus through legislation would be difficult in a deeply divided parliament where Noda's party holds a slim majority. The reports come months after Noda was bounced into promising an early general election in exchange for opposition support on a Bill to double Japan's sales tax. The legislation was an attempt to partially plug the country's vast debt hole, and was supported by international bodies, the press and most domestic commentators, but was unpopular among the public. Observers say his factionally-divided Democratic Party of Japan is likely to suffer at the hands of voters disappointed by a lacklustre three years in office.