The Liberal Democratic Party is calling for a ¥60 trillion ($556 billion) stimulus package to help households and small businesses survive the fallout from the coronavirus outbreak.
Prime Minister Shinzo Abe, who has warned of a prolonged battle against the COVID-19 pandemic, has pledged to compile the “boldest-ever” package and one that would exceed the ¥56.8 trillion stimulus in response to the 2008 global financial crisis.
His administration plans to finalize the details by early April and secure funding in a supplemental budget for fiscal 2020.
The LDP is proposing that fiscal spending should be around ¥20 trillion, compared with the ¥15 trillion stimulus package formulated in the aftermath of the collapse of Lehman Brothers Holdings Inc.
The coronavirus outbreak that began in China late last year has already dealt a blow to a Japanese economy already weakened by the October increase in the consumption tax. Opposition lawmakers, along with some members of the LDP, have been stepping up calls for lowering the tax — now at 10 percent for most goods and services — to reduce the burden on struggling households.
Abe, who went ahead with the tax hike after putting it off twice because the economy was deemed too weak to handle it, has sounded negative about lowering it now.
In its recommendations, issued Monday evening, the LDP aims to provide benefits worth over ¥10 trillion, equivalent to a 5 percentage point cut in the consumption tax. Such benefits would include cash handouts to households and subsidies for freelancers and small and midsize companies.
The proposals came after Abe unveiled a plan to give cash to households during a news conference Saturday, though he said the government would limit eligibility after some lawmakers stressed the need for a nondiscriminatory cash handout program.
To expand financial support to small and midsize companies, Abe pledged to provide loans with no interest or collateral at private financial institutions.
The LDP said more than ¥40 trillion is needed to ensure that companies have access to funding and to give subsidies to firms that maintain their employee numbers despite the difficult business environment.
The compilation of the supplementary budget comes immediately after the Diet on Friday approved a record ¥102.66 trillion budget for fiscal 2020, which starts Wednesday.
Restoring Japan’s fiscal health, the worst among major developed economies, is being relegated to the back burner as the government tries to cope with the public health crisis.
The nation has so far avoided an explosive increase in coronavirus infections. While a recent surge in infections in Tokyo has raised concerns, Chief Cabinet Secretary Yoshihide Suga reiterated Monday that the situation does not call for a state of emergency declaration.
The number of infections across Japan has surpassed 2,600, including about 700 from the Diamond Princess cruise ship that was quarantined in Yokohama in February.
Once a state of emergency is declared by the prime minister, prefectural governors can request that residents stay home and restrict the use of schools and other facilities where large numbers of people gather.
To contain the spread of COVID-19, officials on Tuesday warned citizens to avoid all travel to 49 countries, including the United States, China and South Korea.
The Foreign Ministry raised its travel advisory for these areas to Level 3, bringing the total number of countries and territories at that classification to 73, or more than a third of the world.
Some areas of China and South Korea such as Hubei Province and Daegu as well as more than 20 European countries have already been subject to an entry ban imposed by Japan.
Coronavirus cases have surged in the United States, which has overtaken Italy and China to become the country worst-hit by the pandemic that has killed more than 33,000 people globally, according to data compiled by Johns Hopkins University of the United States.
Other parts of Europe such as Spain and Germany have also been heavily impacted.