Japan announces $275 billion stimulus package

[October 30, 2008]  TOKYO (AP) -- Japan's Prime Minister Taro Aso announced a 27 trillion yen ($275 billion) stimulus package Thursday for the world's second-largest economy, including credits and loans to help small businesses, a reduction in highway tolls and a cash payback to households.

Aso said the move was intended to shore up Japan's economy amid the worldwide financial crisis. Aso said that the financial outlook is severe.

"The global financial crisis is almost certain to affect Japan's real economy," he said.

But he added that Japan's economy is relatively stable.

"Our financial system is overall more firm than that in the West," Aso said. "We understand that the most important thing is to assure the security of average households."

Aso said the package -- which will total 26.9 trillion yen ($273 billion) -- will include 2 trillion yen ($20 billion) in fixed-sum benefits to households, meaning a 60,000 yen ($600) payment for a family of four.

In addition, there will be more subsidies for farmers and a cut in payroll deductions for employment insurance.

Tokyo stocks hit 26-year lows earlier this week and the surging Japanese yen is punishing the country's exporters by making their products more expensive in the United States and other markets at a time when the crisis is slashing sales.

The new plan comes on the heels of an 11.7 trillion yen supplementary budget approved by parliament. That plan included help for fishermen and farmers to deal with high fuel prices, and assistance for part-time workers to find better jobs.

As the global financial crisis began to unfold earlier this year, Japan's economy looked to be in good shape compared to other advanced nations, avoiding major bank failures and bailouts.

But Japan's economy, which is largely driven by exports, is sputtering. On Wednesday, the government said industrial output fell for the third straight quarter, with further declines expected in the months ahead.

[Associated Press; By SHINO YUASA]

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