Japan’s cabinet approves lavish $135 billion stimulus as markets fret over fiscal policy

(Corrects headline to add “billion”)

TOKYO (Reuters) -Japanese Prime Minister Sanae Takaichi’s cabinet approved a 21.3 trillion yen ($135.40 billion) economic stimulus package on Friday, marking the first major policy initiative under the new leader, who has pledged to pursue expansionary fiscal measures.

The package includes general account outlays of 17.7 trillion yen, far exceeding the previous year’s 13.9 trillion yen and representing the largest stimulus since the COVID pandemic. It will also include 2.7 trillion yen in tax cuts.

Growing concerns about the nation’s worsening fiscal position brought about by Takaichi’s lavish stimulus package have sent the Japanese currency to 10-month lows and super-long government bond yields to record highs.

The package will be funded by an expe