Japan borrows heavily to stimulate its economy. Live from the UK, this is the Marketplace Morning Report from the BBC World Service. I'm William Lee Adams. Good morning.

Japan's cabinet has approved a stimulus package worth more than $130 billion. It's the first major policy initiative of the new Prime Minister, Sana'e Takaiichi, and is the largest spending

plan since the COVID-19 pandemic. It aims to help households and firms, with measures like

energy subsidies and tax cuts. Ms. Takeichi came to power last month with a promise to fight

inflation. Let's speak to the BBC's Davina Gupta. Hi, Davina. Hi. So tell us more about this package.

So what we are seeing from this particular stimulus package is that a big chunk of the money will go towards helping households with everyday costs.

So we're talking about including subsidies to bring down gas and electricity bills and also a one-off cash handout for every child to support

families. This comes at a time where Japan's new Prime Minister, Sanei, Takeichi, had promised

to tackle inflation. If you look at Japan's economy, now prices have been rising. Bank of Japan

had kept a 2% target for inflation, but now for 43 months in a row, which is the longest stretch since 1992, inflation has been above it.

And that's been a major source of frustration for voters. We are also seeing Japan spending more on its defense. It has decided to

have its defense spending at 2% of its GDP this fiscal year. And this is two years earlier than

originally planned. All of this is coming because Takiichi is also facing diplomatic pressure from

China. We've been talking about this week about her comments on Taiwan's sovereignty,

and those remarks did not really go down well with China,

which is now restricted import of seafood from Japan.

It has also advised Chinese citizens not to travel to Japan so much,

which has hit their travel and tourism industry really hard.

This is an attempt to shift away from that mood and talk about how the government is doing more

to support people and businesses there.

But the package has stoked fears about increasing Japan's already large debt, hasn't it?

Absolutely, because the concern is where will this money come from?

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