Japan Cabinet OKs Largest Plan to Boost Economy

Japan’s Cabinet approved a record economic stimulus package today worth nearly $200 billion in an attempt to bring the country out of its worst recession in decades.

The massive plan was aimed at turning around the Japanese economy by next year, Prime Minister Keizo Obuchi told reporters after the decision.

“We must do all we can to cut the vicious cycle of recession in order to put the nation’s economy back into recovery,” Obuchi said.

The announcement comes after the government outlined a plan Thursday for new spending and tax cuts, which was immediately panned by critics as insufficient.

Obuchi sees the package as his best chance to stop the economy from contracting for a third consecutive year--a key pledge he made after taking office in July.

Japan could use the help. The economy shrank last fiscal year for the first time in more than two decades. Unemployment and bankruptcy debts are at record highs.

It was unclear how successful the plan will be.

The government has cut taxes and instituted new spending in the past, but pessimistic consumers have not responded yet with a shopping spree.

The plan is expected to be passed later this month in a special session of parliament.