Japanese government unveils aggressive spending plan

Emerging out of what is being described as the world's costliest disaster that wreaked $210 billion in economic damage, Japan on Friday proposed an aggressive spending plan of $167-billion stretched over five years to trigger economic recovery.

Prime Minister Naoto Kan, addressing the nation, said the plan would put Japan on the path to full-scale reconstruction. "We will also fulfill the responsibility to secure funds," Kan told his countrymen, reeling under the impact of the March earthquake and tsunami.

Japan is already reeling under a massive public debt running up to nearly $10 trillion, double its economy. The earthquake and tsunami, which also damaged the Fukushima nuclear plant, has resulted in economic damage worth about $210 billion, according to estimates by Munich Re, even surpassing the Hurricane Katrina in the US, which resulted in damages of about $125 billion.

The Japanese government, which has already announced two emergency budgets worth over $75 billion, on Friday revealed new spending plans that would see it invest in new roads and ports, besides helping farmers and fisher-folk in Tohoku region, the worst-affected by the quake and tsunami.

The government is worried over the fact that many companies that had a presence in Tohoku have announced plans to relocate abroad. It plans to provide incentives to companies wanting to rebuild their factories in the north-eastern region.

Besides raising taxes, the government also plans to issue reconstruction bonds. It is also considering selling off its stake in companies such as NTT (where it owns 37 per cent) and Japan Tobacco (50 per cent). It plans to raise $128 billion in new bonds to help finance its new spending plans.