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Tokyo - Japan on Monday announced plans for a "swift" stimulus package worth around ¥920bn as it looks to safeguard a fragile recovery and curb the impact of a strong yen.
The package will be financed by reserve funds, Prime Minister Naoto Kan said, but he added that the government would consider compiling an additional budget if necessary.
"We decided on the basic plan (of the stimulus) comprising employment, investment, education" and regulatory reform, Kan said.
The package would be given final approval on September 10, he said, before being implemented later that month.
"We decided on the swift stimulus, using ¥920bn of reserve funds," Kan said at the end of an economy ministers' meeting.
The announcement followed the Bank of Japan's move on Monday to extend a multi-billion-dollar loan programme in a bid to curb the strength of the yen, but the currency moved higher, with markets unimpressed.
"We want to take swift measures with the two pillars of this stimulus and the monetary easing the BoJ decided today," Kan said.
The yen last week surged to a 15-year high against the dollar, with a strong Japanese unit hammering overseas profits of the export sector that is driving Japan's recovery from recession.
For every one-yen rise in the currency's value against the dollar, Japan's exporters can lose tens of billions of yen earned overseas when repatriated.
Government officials last week hardened their rhetoric as they sought to talk the yen down from recent highs, heaping pressure on the Bank of Japan to do more to help an economy saddled by weak growth and nagging deflation.
The country remains under pressure to safeguard its fragile recovery, with weak gross domestic product growth of an annualised 0.4% in the second quarter pointing to a slowdown.
And dreary consumer price data on Friday cast a darker shadow over the government's goal of ending deflation in the fiscal year starting April 2011.
Core consumer prices eased 1.1% in July, the 17th consecutive monthly fall.
Persistent deflation prompts consumers to defer purchases in the hope of further price falls and deters corporate capital spending.