TOKYO: Japan’s government is considering putting together a large-scale economic stimulus package with fiscal spending exceeding $92 billion, the Nikkei newspaper said, as soft global demand and the US-China trade war dampen the country’s fragile recovery.

Adding strain to Japan’s tattered finances, the government will issue more bonds to fund public works spending of up to 4 trillion yen ($36.82bn) and make up for tax revenue shortfalls as firms feel the pinch from the trade tensions, the newspaper said on Saturday.

Prime Minister Shinzo Abe’s administration will finalise the package early next week after consultations with the ruling coalition, the Nikkei said, without citing sources.

Japan’s finance ministry officials were not immediately available for comment.

Ruling party lawmakers have been pressuring the government to compile a big spending package, increasing the chance fiscal policy will play a bigger role in supporting growth despite the risk of more debt issuance.

Bank of Japan Governor Haruhiko Kuroda said on Friday the central bank’s ultra-loose policy is aimed at hitting its price target, not at funding government spending.

Published in Dawn, December 1st, 2019