Japan Stimulus Package to Include $144 Billion in Spending

(Bloomberg) — Japanese Prime Minister Fumio Kishida is set to announce spending of around 21.8 trillion yen ($144 billion) in his latest stimulus package, according to a draft of the plans obtained by Bloomberg.

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The package will fund measures to cushion the impact of inflation on households, help firms raise wages and offer support for domestic investment and growth, the draft showed. Kishida had earlier ordered a temporary cut to income tax and handouts for low-income households as key elements of the package.

Around 13.1 trillion yen will go toward funding the package through an extra budget, likely adding to the country’s massive debt pile. The overall size of the package is set to be around 37.4 trillion yen, including private sector spending tied to the measures.

The package comes amid a decline in support for Kishida to the lowest levels since he took office two years ago, as inflation continues to outpace wage gains in the country. Still, the latest effort from Kishida appears unlikely to boost his flagging popularity.

Surveys by the Nikkei newspaper and broadcast news network ANN last week found approval for Kishida at 33% and 26.9%, respectively. A Nikkei poll also showed that 58% of respondents didn’t have any positive expectations for the economic package.

Real wages in the country have continued to fall for 17 consecutive months, as pay growth has failed to catch up with inflation in the country, despite significant gains in the spring pay talks this year for labor unions negotiating with Japan’s largest corporates.

Support for Kishida has continued to slide even after he said he’ll be announcing tax rebates and handouts to help ease the impact of inflation.

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(Updates with more details from draft, background)

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