The government on Monday submitted to the Diet a ¥25.69 trillion ($240 billion) reworked supplementary budget to fund a package of emergency measures aimed at mitigating the economic impacts of COVID-19.
The draft budget, approved by the Cabinet on April 20, was boosted from the original ¥16.81 trillion due to a sudden policy shift by Prime Minister Shinzo Abe to provide ¥100,000 to all residents instead of a plan to give ¥300,000 to households whose income had fallen sharply.
The extra budget for fiscal 2020 is expected to be approved by the House of Representatives on Wednesday, even though the day is a national holiday, and to be enacted the following day after passage in the House of Councillors.
It will be the first time for the Diet to convene a session on a weekend or national holiday in about nine years. The last time it did so was to deliberate a draft extra budget following the massive earthquake and tsunami that hit the Tohoku region in 2011.
“The virus infections have been exerting an enormous impact on the domestic and overseas economies, and the extremely severe situation is expected to continue until we can see signs of the outbreak coming to an end,” Finance Minister Taro Aso said Monday in a speech to the lower house.
Calling for swift approval of the budget, Aso said, “We’ve decided to take every possible policy measure such as fiscal, financial and taxation steps, without being bound by precedents.”
Aso also vowed to “fully protect employment, businesses and livelihoods” by introducing policies such as the universal cash handout plan.
The 2020 extra budget includes ¥48.4 trillion in direct fiscal spending, including by local governments. It has been drafted to partially fund an overall economic package aimed at tackling the pandemic that has been scaled up to ¥117.1 trillion from ¥108.2 trillion, with the new cash handout program for some 126 million people in Japan requiring an additional ¥8.88 trillion.
The package also includes loan programs and deferred tax payments. To finance it, the government will issue ¥23.36 trillion of deficit-covering bonds.
On April 17, Abe replaced the plan to give ¥300,000 to struggling households with the across-the-board ¥100,000 cash handout program, yielding to pressure from Komeito, the junior coalition partner of his ruling Liberal Democratic Party.
The revision came on the day Abe expanded the state of emergency beyond Tokyo, Osaka and five other prefectures to all of Japan in an attempt to prevent the further spread of the virus.
Among other measures in the package are subsidies of up to ¥2 million for sole proprietors, including freelancers, and midsize companies whose revenues have fallen significantly since the outbreak of the virus.
The government will also extend special subsidies worth ¥1 trillion to local governments so they can financially support companies that comply with authorities’ requests to suspend operations under the nationwide state of emergency through May 6.
About ¥13.9 billion will be used to triple the national stockpile of the anti-influenza drug Avigan, which may be effective in treating the respiratory disease caused by the new virus, to ensure there is enough to treat 2 million people.
Developed by a group firm of Fujifilm Holdings Corp., the drug is being tested as a treatment for COVID-19 after studies in China suggested its efficacy.
The total size of the latest steps far exceed the emergency package worth ¥56.8 trillion compiled in April 2009 to counter the effects of the global financial crisis, following the collapse of Lehman Brothers Holdings Inc. the previous year.
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