The Cabinet approved Tuesday a ¥21.84 trillion third supplementary budget for fiscal 2020, to finance the government's latest economic package aimed at ensuring the coronavirus-stricken economy stays on a recovery track.
The stimulus entails new national bond issuance worth ¥22.40 trillion, which will also make up for an expected shortfall in tax revenue for the fiscal year through March. The government has revised down its revenue estimate from ¥63.51 trillion to ¥55.13 trillion given the impact of COVID-19 on corporate earnings.
As a result, the nation's total new debt issuance for the current fiscal year will hit a record high of over ¥112 trillion — more than double the previous record of ¥51.95 trillion marked in fiscal 2009 following the global financial crisis.
The budget boosts Japan's total spending for fiscal 2020 to exceed ¥175 trillion, with three extra budgets compiled in addition to the initial budget of ¥102.66 trillion, fueling fear of a further deterioration in the country's fiscal health — the worst among major developed nations.
The approval comes as the country has seen record numbers of new virus cases, seriously ill patients and daily COVID-19 death tolls since mid-November, even as signs appeared that the world's third largest economy was gradually emerging from the initial impacts of the pandemic.
Prime Minister Yoshihide Suga's administration aims to submit the supplementary budget to an ordinary Diet session set to convene in January, during which an initial budget for fiscal 2021 will also be deliberated.
Approved by the Cabinet a week ago, the government's new economic package is worth about ¥73.6 trillion, including private funds. The figure includes ¥30.6 trillion fiscal spending, which will be funded by the third extra budget as well as the initial budget for fiscal 2021.
Among the package's policy measures is a two-month extension of a special measure boosting financial assistance to firms forced to furlough employees due to worsening business conditions amid the pandemic. The measure was due to expire at the end of this year.
The government will also increase subsidies to help local governments cover losses suffered by restaurants and bars that comply with requests to cut their operating hours.
Financial support for medical institutions will also be raised to secure more beds for COVID-19 patients and prepare for a vaccination program.
In the current fiscal year, the Diet has already passed two extra budgets totaling ¥57.60 trillion to finance economic stimulus steps in the fight against the pandemic. Among the past measures were ¥100,000 cash handouts to all of Japan's 126 million residents.
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