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Tuesday, June 28, 2022

Japan submits record extra budget to parliament for COVID-hit economy

Japan’s government on Monday submitted to parliament a draft extra budget for fiscal 2021 worth a record 36.0 trillion yen ($320 billion) to partially finance its latest economic package, aiming to help the economy recover from the coronavirus pandemic.

With the first supplementary budget for the current fiscal year through March, Prime Minister Fumio Kishida’s administration will also prepare for another wave of COVID-19 infections that could occur during the winter, amid growing concerns over the emergence of the Omicron coronavirus variant.

The extra budget entails new government bond issuance worth 22.1 trillion yen, fueling fear of a further deterioration in Japan’s fiscal health, already the worst among major developed nations.

The opening ceremony of an extraordinary parliamentary session is held in Tokyo on Dec. 6, 2021, with Japanese Emperor Naruhito (top) in attendance. (Kyodo) ==Kyodo

Approved by the Cabinet late last month, the draft supplementary budget was drawn up as Japan has seen remarkably lower numbers of new virus cases on the back of progress in the government’s vaccination program, with various restrictions on domestic economic activities being gradually lifted.

Acknowledging that Japan’s economy “remains in a severe situation,” Finance Minister Shunichi Suzuki asked lawmakers for quick enactment of the budget.

“Taking this opportunity, we need to work for an early resumption of socio-economic activities while making every effort for risk management,” Suzuki said in an address at a plenary session of the House of Representatives.

“To put the economy on a self-sustaining growth track by realizing a virtuous cycle of economic growth and distribution (of wealth), this supplementary budget is required to be enacted as soon as possible,” he said.

The budget is expected to be approved by the Diet in an extraordinary parliamentary session that was convened Monday and will run through Dec. 21.

Of the total, 31.6 trillion yen will be used for the newly compiled stimulus plan, which entails a record 55.7 trillion yen in fiscal spending. The policy package is worth about 78.9 trillion yen when private funds are included.

Among the planned outlays, 18.6 trillion yen will be allocated for measures to prevent the virus from spreading and ease the economic fallout from the pandemic, such as 2.0 trillion yen assistance for medical institutions to secure more beds for COVID-19 patients.

To further promote the government’s COVID-19 vaccine rollouts, 1.3 trillion yen is earmarked, with 601.9 billion yen set aside to procure treatment drugs.

Among the key measures in the stimulus package is 100,000 yen handouts in cash and vouchers for children aged 18 or younger in households where the primary earner’s annual income is less than 9.6 million yen. Under the extra budget, 1.2 trillion yen will be allocated for the project.

Some 268.5 billion yen will be used for restarting the government’s “Go To Travel” subsidy program, which is designed to prop up the pandemic-stricken domestic tourism sector. It was suspended nationwide in December last year following a spike in new virus cases.

Since payments for allowances to furloughed workers have been swelling, the government will use 1.7 trillion yen to increase funds for its unemployment insurance system. It will also allocate 1.4 trillion yen for a separate cash handout scheme of 100,000 yen to be provided to low-income households.

Other than the extra budget, the stimulus steps will be financed by the initial budget for fiscal 2022, to be drafted later this month, as well as reserve funds for fiscal 2021 to deal with the pandemic, which the government can use without Diet approval.


Related coverage:

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Japan Cabinet OKs record 36 tril. yen extra budget for stimulus steps

Japan Cabinet OKs stimulus with record 55.7 tril. yen in spending


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