Japan’s Ruling Party Unveils Stimulus Plan

Prime Minister Keizo Obuchi’s ruling party outlined plans today for Japan’s biggest stimulus package ever in an attempt to jump-start the country’s anemic economy.

The Liberal Democratic Party’s proposals will form the basis of an official government plan to be formally announced Monday and expected to be passed later this month in a special session of parliament.

The centerpiece of the package calls for $82 billion in public-works-related spending through March and $33 billion in income tax cuts next year. With the addition of corporate tax cuts and other tax relief measures, it will probably total a record $148 billion.

The package aims to prevent Japan’s economy from shrinking for a third consecutive year, and to fulfill Obuchi’s pledge to engineer a recovery within two years. It also comes just days before Obuchi meets President Clinton and other leaders this weekend at the Asia-Pacific Economic Cooperation summit in Malaysia.

The government has faced intense pressure--both from opposition parties at home and foreign trade partners--to deal with record unemployment, soaring bankruptcies and deeply shaken consumer confidence.

Japan estimates its gross domestic product will contract by 1.8% in the fiscal year ending March 31. The economy shrank 0.7% last year.

The proposals announced today for a supplementary budget, the third such appropriation measure this year, also include reducing the corporate tax rate to 40% from about 46%. The party also recommended a novel idea designed to get consumers to spend more: the distribution of government-issue coupons worth about $164 to the elderly and families with young children.