Japanese Prime Minister Yoshihiko Noda ordered his Cabinet to draft an economic stimulus package Wednesday, in a move likely to further antagonize the opposition, who see the measure as a time-buying strategy by Mr. Noda to avert an early snap election.
The spending steps will be financed by reserve funds from the budget rather than new government borrowing, reflecting the dire condition of Japan's finances.
But that will mean that unless the ruling and opposition parties manage to agree to a much-belated passage of a bond- issuance bill to finance the budget, the new spending will have little chance of being implemented.
"Given the weakened economy and possibility of additional downward risks, the measures will address the need to end deflation and accelerate the economy," Chief Cabinet Secretary Osamu Fujimura told a news conference, without giving out details on the size or the specific scope of the measures.
Mr. Noda had maintained that he would mobilize public spending as a pump-priming measure with Japan's economy dragged down by the strong yen, slowing global growth and fallout from its diplomatic row with China over disputed territories.
He also needs the economy to be in better shape as a condition for the implementation of his flagship sales tax hike planned from April 2014.
Financial market participants largely shrugged off the package, citing the vagueness of the announcement and skepticism over whether it can ever be implemented.
"Funding is tight, so the plan is just window-dressing," said SMBC Nikko Securities bond strategist Mari Iwashita, adding that the market will be focused on whether Mr. Noda will be able to enact the bond-issuance bill.
The bill to finance some 40% of the budget for this fiscal year, which began in April, has yet to pass parliament due to gridlock between the Democratic Party of Japan-led government and opposition parties.
If the bill is not enacted by the end of November, the government has said it will run out of cash and will have to halt spending originally allotted in the budget, putting a stop to additional spending.
"Passage of a deficit funding bill is absolutely necessary to implement economic stimulus measures," Finance Minister Koriki Jojima told reporters. "Passage of the bill with support of the opposition must precede everything else."
With the opposition controlling one of the two chambers of parliament, their endorsement is essential for the bill's passage, but the main opposition Liberal Democratic Party is demanding that Mr. Noda promise an election by the end of December in exchange for agreeing to the bill.
The prime minister has refused, and the standoff has the parties unable to decide on even the start of the extraordinary parliamentary session, which needs to be held to debate the bond bill.
Opposition leaders charged that Mr. Noda was trying to delay a snap election by using time to compile the latest stimulus package.
"This isn't an economic-boosting measure, it's a measure to delay the dissolution of parliament," Masahiko Komura, the LDP's vice president, told reporters.
"The best way to prop up the economy is to hold an election and set up a new government backed by the people," Mr. Komura said.
No general election needs to be held until next summer, but the LDP is calling for early polls, seeing that they're ahead of the ruling DPJ in voter support ratings.
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The spending steps will be financed by reserve funds from the budget rather than new government borrowing, reflecting the dire condition of Japan's finances.
But that will mean that unless the ruling and opposition parties manage to agree to a much-belated passage of a bond- issuance bill to finance the budget, the new spending will have little chance of being implemented.
"Given the weakened economy and possibility of additional downward risks, the measures will address the need to end deflation and accelerate the economy," Chief Cabinet Secretary Osamu Fujimura told a news conference, without giving out details on the size or the specific scope of the measures.
Mr. Noda had maintained that he would mobilize public spending as a pump-priming measure with Japan's economy dragged down by the strong yen, slowing global growth and fallout from its diplomatic row with China over disputed territories.
He also needs the economy to be in better shape as a condition for the implementation of his flagship sales tax hike planned from April 2014.
Financial market participants largely shrugged off the package, citing the vagueness of the announcement and skepticism over whether it can ever be implemented.
"Funding is tight, so the plan is just window-dressing," said SMBC Nikko Securities bond strategist Mari Iwashita, adding that the market will be focused on whether Mr. Noda will be able to enact the bond-issuance bill.
The bill to finance some 40% of the budget for this fiscal year, which began in April, has yet to pass parliament due to gridlock between the Democratic Party of Japan-led government and opposition parties.
If the bill is not enacted by the end of November, the government has said it will run out of cash and will have to halt spending originally allotted in the budget, putting a stop to additional spending.
"Passage of a deficit funding bill is absolutely necessary to implement economic stimulus measures," Finance Minister Koriki Jojima told reporters. "Passage of the bill with support of the opposition must precede everything else."
With the opposition controlling one of the two chambers of parliament, their endorsement is essential for the bill's passage, but the main opposition Liberal Democratic Party is demanding that Mr. Noda promise an election by the end of December in exchange for agreeing to the bill.
The prime minister has refused, and the standoff has the parties unable to decide on even the start of the extraordinary parliamentary session, which needs to be held to debate the bond bill.
Opposition leaders charged that Mr. Noda was trying to delay a snap election by using time to compile the latest stimulus package.
"This isn't an economic-boosting measure, it's a measure to delay the dissolution of parliament," Masahiko Komura, the LDP's vice president, told reporters.
"The best way to prop up the economy is to hold an election and set up a new government backed by the people," Mr. Komura said.
No general election needs to be held until next summer, but the LDP is calling for early polls, seeing that they're ahead of the ruling DPJ in voter support ratings.
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