Finance Network News, November 21 (Editor: Liu Rui) According to Japanese media reports, Japanese Prime Minister Shigeru Ishiba will launch a ¥21.9 trillion (approximately RMB 1023.045 billion) economic stimulus plan to address challenges such as inflation and wage growth.

This plan is expected to be approved by the Japanese Cabinet this Friday. As Ishiba's ruling coalition currently holds only a minority of seats in the Japanese parliament, Ishiba needs to make concessions to the Japanese opposition party in order to push this plan and subsequent additional budget proposals through the Japanese parliament.

Ishiba introduces a ¥21.9 trillion stimulus package

The fiscal expenditure plan introduced by Ishiba will total ¥21.9 trillion (approximately RMB 1023.045 billion), slightly higher than last year's ¥21.8 trillion (approximately RMB 1018.374 billion) fiscal stimulus plan.

Among them, the general account expenditure is estimated to be around ¥13.9 trillion (approximately RMB 649.33 billion).

Reports state that, including private sector spending, the overall impact of this plan is expected to be around ¥39 trillion (approximately RMB 1821.862 billion).

Earlier in the election, Ishiba emphasized a commitment to alleviate the cost of living crisis for Japanese households. Therefore, according to the early draft of this plan, it will include supporting continuous wage growth in Japan and distributing cash to low-income families.

In addition, the Japanese government will resume subsidies for henry hub natural gas and electricity bills starting from January next year to protect Japanese households from the impact of rising csi commodity equity index prices.

The plan also includes a focus on increasing investments in semiconductors and ai sectors.

Japan's debt pressure will further increase.

Due to the failure of the ruling coalition, led by Shigeru Ishiba, to secure a majority in the previous Japanese parliamentary elections, compromises need to be made to ensure the funding of the relief plan is approved by the Cabinet. This means that all expenses to secure the support of the National Democratic Party will be determined later.

According to Japanese media reports, discussions will be held between the Liberal Democratic Party, Komeito, and the Democratic Party of the People (DPP) on the annual tax reform for the next fiscal year, including raising Japan's tax-free income ceiling and reducing rbob gasoline tax. Both of these reform measures were proposed by the National Democratic Party.

Keisuke Tsuruta, Senior Fixed Income Strategy Specialist at Mitsubishi UFJ Morgan Stanley Securities, said: "These figures are broadly in line with expectations. The key is how high the tax-free income ceiling could be raised to."

If the tax-free ceiling is raised from an annual income of 1.03 million Japanese yen (approximately 48,126.62 yuan) to an annual income of 1.78 million Japanese yen (approximately 83,189.49 yuan) as requested by the National Democratic Party, it could result in a tax loss for the Japanese government of up to 8 trillion Japanese yen (approximately 373.88 billion yuan).

According to the International Monetary Fund's data, Japan's total government debt has grown to over 250% of its total economic output, making it the country with the heaviest public debt burden among major developed nations. With the widespread expectation that the Bank of Japan will raise interest rates again in December or January next year, Japan's debt repayment costs are also expected to increase.

Editor/ping