Japan enacts 241 billion USD extra budget for emergency coronavirus spending

Source: Xinhua | 2020-05-01

Japan's upper house of parliament on Thursday enacted a 25.69 trillion yen (241 billion U.S. dollars) extra budget for fiscal 2020 compiled to finance emergency spending to cushion the economic fallout from the coronavirus pandemic and support businesses and citizens hurt by the crisis.

Before its passage to the upper house, the supplementary budget was passed by Japan's lower house on Wednesday in a rare move for the government to convene as it was a national holiday.

The emergency spending package for the year through next March was initially approved by the Cabinet last week. It had been upwardly revised to 25.69 trillion yen (241 billion U.S. dollars) from an initial 16.81 trillion yen (158 billion U.S. dollars) decided earlier in April.

The initial emergency and extra budget had to be swiftly reworked to cover a 100,000 yen (938 U.S. dollars) nationwide cash handout program to around 126 million people in Japan, at a cost of 8.88 trillion yen (83 billion U.S. dollars), along with other allocations aimed at mitigating the economic fallout from the pandemic here.

Japanese Prime Minister Shinzo Abe announced on April 17 that the government will provide a 100,000 yen (928 U.S. dollars) cash handout to all citizens regardless of their income level to help them deal with the economic impact of the coronavirus.

The one-time cash handout replaces an earlier plan to provide 300,000 yen (2,815 U.S. dollars) to households whose income had fallen to a certain level as a result of the virus.

Abe's ruling coalition Komeito party ally had initially floated the idea, and leaned on the prime minister to agree to the plan and bring it to fruition quickly, saying that that the blanket 100,000 yen cash handout plan should replace the previous 300,000 yen plan.

The allocation for the cash handout will be financed by issuing more deficit-covering bonds, the government has said, despite Japan's fiscal health being the worst in the industrialized world.

The government is planning for the cash handouts to be given out to each of its residents by the end of May.

The emergency package also allocates funds to the tune of 1 trillion yen (9.4 billion U.S. dollars) to local governments so they can provide fiscal support to businesses complying with local authorities' requests to shutter their operations until the nationwide state of emergency comes to an end on May 6, under the government's current plans, although indications from the government Thursday is this period may well be extended.

In addition, the budget has also been compiled to make provisions so that the country's supply of the anti-influenza drug Avigan, shown to have positive effects in treating the symptoms of some COVID-19 patients, can be increased threefold at a cost of 13.9 billion yen (130 million U.S. dollars).

The extra budget will also help fund a record high overall economic package that was increased from an initial 108.2 trillion yen (1 trillion U.S. dollars) to 117.1 trillion yen (1.1 trillion U.S. dollars), in part, so the emergency funding could cover the government's hasty decision to provide across-the-board cash handouts of 100,000 yen to those living in Japan.

The government's latest supplementary spending package far eclipses the package compiled in the wake of the 2008 financial global crisis when the government rolled out an emergency stimulus package worth 56.8 trillion yen (533 billion U.S. dollars) to cushion the downside effects.

After the sales tax was raised from 8 to 10 percent here last October, a 26 trillion yen (244 billion U.S. dollars) stimulus package was also approved thereafter to help counter the negative effects, also considerably less than the latest measures.