TOKYO, Sept. 10 (Xinhua) -- The Japanese government on Friday finalized the details of a fresh economic stimulus package worth 915 billion yen (10.91 billion U.S. dollars) as the nation struggles to cope with a surging yen and persistent deflation.
The new package which will tap into the government's reserve funds and was approved by the Cabinet of Prime Minister Naoto Kan earlier in the day, is expected to boost real gross domestic product by about 0.3 percent and create some 200,000 jobs, the government maintained, although a precise timeframe for when the spending could be tangibly measured in terms of economic development was not mentioned by the government.
The government said in an official statement it "will take decisive actions, including market intervention, when necessary" to stem the yen's rise against other major currencies while expressing hope that the Bank of Japan (BOJ) will take "additional necessary policy responses to beat deflation in close collaboration with the government."
The yen has risen to 15-year highs against the U.S. dollar recently, which is severely hampering Japan's export-led economic recovery. Japanese firms reliant on overseas business see profits made abroad eroded when repatriated. The dollar has fallen to the 83 yen level this week when many Japanese companies have set their assumption rates for dollar/yen at 90 yen and at 110-115 yen for euro/yen in the year to March 2011.
Prime Minister Naoto Kan said the package will help promote and accelerate its growth strategy, including compiling a program around October to November to promote domestic investment such as helping firms to keep factories and headquarters in Japan.
The government will also encourage Japanese firms to spend more capital in domestic markets. This is due largely to fears that the rising yen is forcing large companies to turn to overseas markets for cheaper labor and other costs.
