Japan set to approve $87 billion economic stimulus this week

By Yoshifumi Takemoto

TOKYO (Reuters) – Japan’s ruling coalition on Wednesday agreed with a key opposition party on the draft of an economic stimulus package, clearing a major hurdle for the $87 billion package designed to help cushion the blow to households from rising prices.

The agreement among the Liberal Democratic Party (LDP), its ruling coalition partner Komeito and the Democratic Party for the People (DPP) meant the package is now likely to be approved by the cabinet of Japanese Prime Minister Shigeru Ishiba on Friday.

The coalition camp now needs DDP’s cooperation after the Oct. 27 election left the LDP and Komeito leading a fragile minority.

The LDP and Komeito agreed to reflect some of DPP’s key policy initiatives, including raising the basic tax-free income allowance and lowering the gasoline tax, as “top priorities” in the package, a DPP executive said at a news conference.

The stimulus package will also provide 30,000 yen ($193) to low-income households that are exempt from residential taxes and 20,000 yen per child for households with families, sources familiar with the matter have told Reuters.

The parliament will start discussions next month on a supplementary budget to fund the package, which is reportedly worth about 13.5 trillion yen ($87 billion).

($1 = 155.4800 yen)