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The Japanese government on Friday postponed unveiling of a key economic stimulus package until next week after one of its coalition partners argued for an increase in the amount of spending.
The government led by Prime Minister Yukio Hatoyama plans to spend about JPY 7.1 trillion in its latest effort to boost the economy, which is facing deflation and a strong currency. The programme was intended to implement early next year to support a fragile economic recovery. Reports said the leader of the People's New Party, Shizuka Kamei, demanded the government to increase the amount to JPY 8 trillion to ensure economic recovery. The issue is expected to resolve by Monday.
Hatoyama's Democratic Party of Japan was initially of the view that further stimulus measures will not be needed due to improvement in the global economy. The party came into power in August, beating the Liberal Democratic party, which ruled the country for a long time.
On December 1, the Bank of Japan decided to introduce fund-supplying measures in an emergency meeting amid recent appreciation of the yen and falling consumer prices. The Japanese economy is picking up, but there is not sufficient momentum to support self-sustaining recovery in business fixed investment and private consumption. Also, the pace of economic improvement is likely to remain moderate until around the middle of fiscal 2010.
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