The government submitted to parliament on Monday a draft second extra budget for fiscal 2020, totaling a record ¥31.91 trillion ($291 billion), to implement additional measures to strengthen the medical system and help people hit hardest by the coronavirus pandemic.
With the supplementary budget, which was approved by the Cabinet on May 27, the government plans to roll out a new package of programs worth about ¥117 trillion. Programs will focus on support for small firms, struggling since stay-at-home requests were imposed in April, as well as medical staff at the forefront of the battle against the virus.
The government said the size of the package, including loans and investments in addition to actual fiscal spending, is worth about ¥117 trillion, nearly the same size as the first extra budget enacted on April 30.
“The novel coronavirus is having an enormous impact on the domestic and overseas economies,” Finance Minister Taro Aso said in an address at the House of Representatives. “We must continue to help those that have been put in difficult situations and protect jobs, businesses and livelihoods.”
The second extra budget for the fiscal year, which started on April 1, is expected to be approved by the House of Representatives on Wednesday, and to be enacted the following day after its passage in the House of Councillors.
Prime Minister Shinzo Abe’s administration drafted the new budget to double the scale of measures to combat the fallout from the pandemic. Japan will pay for it in its entirety by issuing new bonds, adding to its mountain of debt.
Opposition parties are likely to ramp up their criticism over a lack of transparency in how major advertising agency Dentsu Inc. was commissioned to implement parts of the package.
Among the new measures is a subsidy program for rent payments for small businesses and individual proprietors running out of cash, covering two-thirds of the payments for six months with an upper limit of ¥6 million.
The government will also deliver ¥200,000 to each front-line worker at medical institutions treating COVID-19 patients, and ¥100,000 to each member of staff at hospitals that have secured beds and are prepared to accept people infected with the virus that causes the respiratory disease.
As for assistance for companies that have been forced to keep employees out of the workplace due to worsening business conditions brought on by the pandemic, the upper limit will be raised to ¥15,000 per day per worker from the current ¥8,330.
The budget also includes a reserve fund of ¥10 trillion for potential future countermeasures. “We expect this to be a drawn-out battle, and it’s hard to foresee how the situation will turn out,” Aso said.
How to use the fund was not initially fixed. But after facing criticism from opposition parties that the amount was too large for it be spent without Diet approval, the Abe administration recently decided to earmark ¥5 trillion for helping companies maintain employment and boosting medical services.
Combined with the first extra budget for fiscal 2020, the government has said the enlarged economic package is worth over ¥230 trillion.
It includes government and Bank of Japan loan programs, and investment by the private sector. The government says such financing programs provided by the first and second packages will support ¥130 trillion worth of fundraising by companies.
The first supplementary budget, amounting to ¥25.69 trillion, finances such steps as issuing ¥100,000 cash handouts to 126 million residents in Japan including foreign nationals.
Amid a deteriorating economic situation and public frustration over the size and scope of the government’s initial relief measures, Abe instructed officials to draw up the fresh supplementary budget in mid-May.