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Japan readies $182 billion economic package, no new debt needed: sources

Businessmen are seen inside a high-rise office building in Tokyo November 21, 2013. REUTERS/Issei Kato
Businessmen are seen inside a high-rise office building in Tokyo November 21, 2013. REUTERS/Issei Kato

By Takaya Yamaguchi

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe is readying a $182 billion economic package this week in his latest bid to pull the economy out of deflation, but the new measures will not require the government to sell more debt.

The package, to be approved by Abe's government on Thursday, will have a headline value of 18.6 trillion yen ($181.6 billion), people familiar with the process said on Wednesday.

That puts the overall package on a par with Abe's 20 trillion yen burst of spending early this year as part of his campaign to end 15 years of falling prices and tepid growth.

But the bulk of the package includes loans from government-backed lenders, spending by local governments and corporations, the sources said. The headline figure usually announced by the Japanese government on economic measures often includes spending that has already been committed, and tends to far exceed the amount of actual new government spending.

The long-expected core of the package will be spending measures Abe ordered in October to bolster the economy ahead of a national sales-tax hike in April, the sources told Reuters on condition of anonymity.

Government officials at the time said the main stimulus steps, to be approved on Thursday, would be worth about 5 trillion yen. Sources said on Tuesday the stimulus will be between 5.4 trillion yen and 5.6 trillion yen.

This amount will not require new debt issuance as it will be covered by tax revenues that have exceeded initial budget projections due to the economic recovery, as well as using unspent funds from other accounts, the sources said.

Measures include steps intended to boost competitiveness; assist women, youth and the elderly; accelerate reconstruction from the March 2011 earthquake and tsunami; and build infrastructure for the 2020 Tokyo Olympics, they said.

($1 = 102.4450 Japanese yen)

(Writing by William Mallard; Editing by Dominic Lau and Eric Meijer)

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