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Japan's Cabinet approves record budget

  • Story Highlights
  • Aso's 88.55 trillion yen ($980B) budget is a 6.6 percent increase from a year ago
  • Japan's parliament, the Diet, is expected to vote on the budget in January
  • Japan is in the midst of a recession
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TOKYO, Japan (CNN) -- Japanese Prime Minister Taro Aso's Cabinet on Wednesday approved a record budget, including an emergency economic stimulus package, for the 2009 fiscal year.

The 88.55-trillion-yen ($980 billion) budget is a 6.6 percent increase from a year ago, according to the Finance Ministry, and is packed with new spending to spur the economy buffeted by a global recession.

Japan's parliament, the Diet, must still approve the budget, a formality given that Aso's Liberal Democratic Party is firmly in power. The vote is expected in January.

Last Friday, the Bank of Japan cut its key interest rate to 0.1 percent from 0.3 percent in an effort to boost the nation's economy.

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"Financial conditions have deteriorated sharply on the whole," a BOJ statement said, adding that they are "likely to increase in severity for the immediate future." Video Watch as elderly citizens get caught in shoplifting trend »

Japanese exports have been hit hard; the rising yen sent the country's trade deficit up to $2.5 billion in November, according to the Japanese government.

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