Prime Minister Shinzo Abe’s cabinet approved a 28 trillion yen ($274 billion) stimulus package on Tuesday, aimed at bolstering Japan’s sluggish economy.
The package includes 13.5 trillion yen ($132 billion) of fiscal measures, with 7.5 trillion yen ($73 billion) in spending by national and local governments, and 6 trillion yen ($59 billion) in low-cost loans.
It is part of government efforts to coordinate policy with the Bank of Japan (BOJ) as there are growing concerns BOJ policy has reached its limit to fuel growth and inflation. Last week the regulator eased its monetary policy again and announced plans to review the stimulus program in September.
"We compiled a strong economic package draft aimed at carrying out investment for the future," Abe told a meeting of cabinet ministers and ruling party executives on Tuesday morning, according to Reuters.
He added that “with this package, we'll proceed to not just stimulate demand but also achieve sustainable economic growth led by private demand."
Abe revealed the stimulus package last week, saying more investment was needed to expand the world’s third-largest economy. He said funds would be used to provide better port facilities for cruise ships and accelerate the construction of a high-speed magnetic-levitation train line connecting Tokyo and Osaka. In June, Abe postponed a planned sales-tax increase for two and a half years.
Japan has been trying to revive its struggling economy for years. The Bank of Japan’s aggressive monetary policy has also failed to provide a much needed boost to the economy.
Wages in Japan haven’t grown more than one percent in any year since 1997, and actually shrank in the last four years when adjusted for inflation.
Abe has been trying to reboot the country’s economy since he took power in 2012 and introduced a three-stage policy known as 'Abenomics'. However, economists often raise doubts about the policy, saying it is not working.