Japan's government has endorsed close to $25 billion in extra spending in order to stimulate the world's second largest economy. Most of the additional funds are aimed at easing Japan's record unemployment numbers.
Japanese Prime Minister Junichiro Koizumi and his cabinet ministers approved a supplementary budget Wednesday, hoping that it will kick-start growth through job creation and help cushion the pain of the economic reform program now underway.
Unemployment in Japan is now at a post-war high of 5.3 percent and the economy is expected to contract this fiscal year by up to 1.5 percent.
Some of the nearly $25 billion extra budget is earmarked to help clean up the banking sector's sour loans and to assist small business struggling to survive. More than $200 million will be set aside to deal with a recent outbreak of mad cow disease in Japan that crippled the country's domestic beef industry.
But not all the money will go towards purely domestic concerns. Four-hundred million dollars will pay for emergency measures to battle terrorism in the wake of the September 11 attacks in the United States. Another $400 million will fund Japan's contribution to the U.S. led military strikes against suspected terrorist sites in Afghanistan.
Parliament is set to officially approve the supplementary package in the coming month.
But leading Japanese officials are already debating the possibility of a second supplementary budget to shore up the economy.
Finance Minister Masajuro Shiokawa says he remains cautious because he does not believe another budget would be an effective recession-fighter.
However, Takeo Hiranuma, Japan's Economy, Trade and Industry Minister, warns that if conditions deteriorate further, the government may have to abandon Prime Minister Koizumi's fiscal restraint policy and issue a second extra budget before the fiscal year ends in March.