By Hideyuki Sano
TOKYO, Dec 4 (Reuters) - The Japanese cabinet wrestled over the size of an extra stimulus package on Friday, with one small coalition partner reportedly seeking a bigger chunk of fresh fiscal spending to support the world's second-largest economy.
The cabinet was discussing a package totalling 24 trillion yen ($272 billion), including about 4 trillion yen for programmes requiring immediate fiscal spending, the Nikkei business daily reported.
The fiscal spending in the package would reach 7.1 trillion, including 3 trillion yen in tax grants to local governments, it said.
But at a working meeting on Friday morning, the parties failed to agree on the plan, ruling coalition lawmaker Mikio Shimoji said, adding that they would meet again later in the day to renegotiate.
'We can't put it together like this,' outspoken banking minister Shizuka Kamei said. Kamei's small coalition party is looking to increase the fiscal spending to 8 trillion yen, Japanese media reported.
The package is expected to include 400 billion yen for local government public works projects, the Nikkei said.
The government will avoid issuing deficit-covering bonds to fund the stimulus spending for the fiscal year to next March, another lawmaker said.
The Democratic Party led-government, in power for a little more than two months, is desperate to avoid a return to recession ahead of an upper house election expected in July.
Japan pulled out of recession in April-June, helped by a rebound in exports and industrial output as well as a rise in consumption on the back of the government's stimulus package.
But revised gross domestic product figures due next Wednesday are expected to show Japan's economy grew at a much slower pace in July-September than the preliminary estimate.
The yen's rise to a 14-year high against the U.S. dollar also rattled many exporters -- the leading ending of the economy -- and fueled worries that the economy could lose momentum early next year when boost from stimulus will fade.
But the government is also keen to cap borrowing as investors are growingly concerned about Japan's ballooning public debt, which is expected to reach 227 percent of GDP next year.
For a graphic tracking spending, revenue and public debt, click: http://r.reuters.com/bad88d
The stimulus will be funded by savings the government has made from spending cuts as well as tapping contingency funds.
Still, the government is likely to issue a record amount of government bonds this year to make up for a big shortfall in tax revenue.
($1=88.21 Yen)
(Editing by Hugh Lawson)
((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters Messaging: hideyuki.sano.reuters.com@reuters.net)) Keywords: JAPAN ECONOMY/BUDGET (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO, Dec 4 (Reuters) - The Japanese cabinet wrestled over the size of an extra stimulus package on Friday, with one small coalition partner reportedly seeking a bigger chunk of fresh fiscal spending to support the world's second-largest economy.
The cabinet was discussing a package totalling 24 trillion yen ($272 billion), including about 4 trillion yen for programmes requiring immediate fiscal spending, the Nikkei business daily reported.
The fiscal spending in the package would reach 7.1 trillion, including 3 trillion yen in tax grants to local governments, it said.
But at a working meeting on Friday morning, the parties failed to agree on the plan, ruling coalition lawmaker Mikio Shimoji said, adding that they would meet again later in the day to renegotiate.
'We can't put it together like this,' outspoken banking minister Shizuka Kamei said. Kamei's small coalition party is looking to increase the fiscal spending to 8 trillion yen, Japanese media reported.
The package is expected to include 400 billion yen for local government public works projects, the Nikkei said.
The government will avoid issuing deficit-covering bonds to fund the stimulus spending for the fiscal year to next March, another lawmaker said.
The Democratic Party led-government, in power for a little more than two months, is desperate to avoid a return to recession ahead of an upper house election expected in July.
Japan pulled out of recession in April-June, helped by a rebound in exports and industrial output as well as a rise in consumption on the back of the government's stimulus package.
But revised gross domestic product figures due next Wednesday are expected to show Japan's economy grew at a much slower pace in July-September than the preliminary estimate.
The yen's rise to a 14-year high against the U.S. dollar also rattled many exporters -- the leading ending of the economy -- and fueled worries that the economy could lose momentum early next year when boost from stimulus will fade.
But the government is also keen to cap borrowing as investors are growingly concerned about Japan's ballooning public debt, which is expected to reach 227 percent of GDP next year.
For a graphic tracking spending, revenue and public debt, click: http://r.reuters.com/bad88d
The stimulus will be funded by savings the government has made from spending cuts as well as tapping contingency funds.
Still, the government is likely to issue a record amount of government bonds this year to make up for a big shortfall in tax revenue.
($1=88.21 Yen)
(Editing by Hugh Lawson)
((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters Messaging: hideyuki.sano.reuters.com@reuters.net)) Keywords: JAPAN ECONOMY/BUDGET (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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