Japan plans to spend just over 20 trillion yen ($133 billion) on a new economic package aimed at helping households cope with accelerating inflation and rejuvenating the tourism sector hit by the pandemic, sources familiar with the plan said on Friday.
The country’s demand remains weak even as the economy has emerged from the initial fallout from COVID-19, and government spending slightly north of 20 trillion yen, due to be finalized this month, is designed to boost it.
Prime Minister Fumio Kishida’s cabinet is expected to make a formal decision next Friday so that a supplementary budget to fund the package can be submitted to parliament, the sources said.
The total size of the package will likely be larger, given that the expenses of others, such as local governments, will be included. The question is how the government will get funds when the country’s debt is more than double the size of the economy.
The government expects to get a few trillion yen in idle funds from the state budget for the 2021 fiscal year that ended in March and higher-than-expected tax revenue, the sources said, adding that the rest will come from the issuance of government bonds.
Kishida, who stressed the need for a “bold” package, focuses on three steps to deal with inflation and the effect of a weaker yen, boost wage growth and rejuvenate growth through l investment and reform.
Public spending could rise further in response to pleas from the ruling Liberal Democratic Party. LDP policy chief Koichi Hagiuda said the government should aim for an economic package worth 30 trillion yen to bridge the country’s supply and demand gap of about 15,000 billion yen on an annual basis.
Among inflation-fighting measures, the government plans to reduce household utility bills, targeting electricity and town gas. Existing subsidies given to petroleum wholesalers to lower gasoline and kerosene prices will be extended beyond December.
Russia’s war on Ukraine has pushed up energy and food prices, while the fall of the yen to its lowest level in decades has exacerbated the pain of resource-poor Japan in inflating import costs.
The growing cost of living crisis has come at one of the most difficult times for Kishida, who has seen his cabinet support ratings plummet following his decision to hold a state funeral for the former prime minister. assassinated Minister Shinzo Abe, the country’s oldest leader, who was powerful but divisive.
Public scrutiny of the government and the LDP has also intensified over questionable links between party lawmakers and a controversial religious group.
Category: Japan
Leave a Reply