Japan’s minority government has announced a $140-billion stimulus package to boost consumer spending and address economic challenges following a significant political setback.
The move comes after Prime Minister Shigeru Ishiba’s coalition suffered the worst election result for the ruling Liberal Democratic Party (LDP) in 15 years, losing its majority in the lower house of parliament during the October 27 elections.
The 21.9 trillion yen ($141.8 billion) package includes direct 30,000 yen handouts to low-income households, fuel and energy subsidies, and support for small businesses. Officials estimate that the measures will generate a total business impact of 39 trillion yen.
“To enhance the vitality of Japan as a whole, we will strengthen the growth of the national and regional economies and raise wages for all people, of all generations,” said Yoshimasa Hayashi, the government’s chief spokesperson, in a statement outlining the stimulus plan.
To secure support for the package, Prime Minister Ishiba conceded to the opposition Democratic Party for the People (DPP) ‘s demand to raise the income tax threshold. The DPP argues that this policy will address labor shortages and encourage part-time workers to increase their hours, boosting consumer spending.
However, critics warn that this measure could significantly reduce tax revenues, further increasing Japan’s debt, which already exceeds 200% of the country’s GDP.
The government plans to submit a supplementary budget proposal to fund the stimulus by the end of the year, setting the stage for further political negotiations and debates over fiscal policy.
The package underscores Japan’s ongoing struggle to balance economic recovery with fiscal responsibility as the nation grapples with inflation, political challenges, and mounting public debt.
