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Friday, February 19, 1999 Published at 10:01 GMT

World: Asia-Pacific

Japan's big spender budget

Japan's economic downturn has seen record homelessness

Japan has begun its first hand-out of shopping coupons, part of a government effort to stimulate the ailing economy.

Parliament at the same time approved a budget which will pump a further $700bn into the economy.

Juliet Hindell: Coupons valid in red light districts
On Friday, needy people in a district of Tokyo were the first to receive the new shopping coupons, which will eventually be distributed to 35m people across the country.

Families with children under 15, and poor or bedridden people over 65, each received 20,000 yen ($175).

The coupons were approved last November as part of a deal between the governing Liberal Democratic Party and the second largest opposition party.

The coupons are valid for six months and must be used in the neighbourhood where they were issued.

Most people will use their coupons for buying ordinary goods, but the vouchers will also be accepted in some red light districts.

Government to spend more

[ image: Obuchi: Relief at budget approval]
Obuchi: Relief at budget approval
The hand-out began as the Lower House of the Japanese Parliament approved a 5% increase in spending, intended to cover public works projects such as retraining unemployed workers.

The $682bn spending plan, which now goes to the upper house for a vote, is packaged with $75bn in tax cuts.

It comes at a time when the weak economy has already diminished the government coffers.

Prime Minister Keizo Obuchi expressed relief that the budget had been passed so swiftly.

The plan now goes to the Upper House for a vote, but the Japanese constitution allows it eventually to become law even if the Upper House does not endorse it.

Sceptical reaction

Economists are sceptical about Japan's spending plans, which are likely to increase its already heavy national debt.

"It doesn't address any of the structural problems in the economy. In fact, it does exactly the opposite," said Ron Bevacqua, an economist at Merrill Lynch in Tokyo.

"It allows them to support the economy and avoid structural change."

Experts have also expressed doubts about the effectiveness of the coupons plan.

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