Finance Minister Taro Aso pledged Monday to rejuvenate the economy, which has been badly hit by the spread of the coronavirus, and advance structural reforms for the future after the pandemic.

In his speech on the first day of this year’s ordinary Diet session, Aso said the government will prevent the number of coronavirus infections from rising further “while supporting employment and business.”

Finance Minister Taro Aso delivers a speech at the Lower House plenary session Monday. | KYODO
Finance Minister Taro Aso delivers a speech at the Lower House plenary session Monday. | KYODO

Aso went on to say Japan will try to realize “a transformation of the economic structure and a virtuous cycle of the economy toward a post-coronavirus period.”

At the same time, he warned of downside risks, saying the economy is still in a “severe condition.” The nation has been hit by a third wave of coronavirus infections, which led the government earlier this month to declare its second state of emergency in Tokyo and some other areas.

Reiterating the government’s target of bringing its primary balance — tax revenue minus expenses other than debt-servicing costs — into the black by fiscal 2025, Aso gave assurances that efforts to cut expenditures will continue.

He also asked his fellow lawmakers to cooperate on the swift passage of the ¥106.61 trillion draft budget — the country’s largest-ever — for the next fiscal year.

Along with the third extra budget for fiscal 2020 through March, with actual fiscal spending of ¥15.43 trillion, the government needs to secure the passage of the annual budget in the Diet session.

The budgets will finance the government’s latest economic package worth ¥73.6 trillion, featuring measures including those aimed at pushing Prime Minister Yoshihide Suga’s key policies of digitalization and reduction in carbon emissions.

In a separate speech, Yasutoshi Nishimura, minister for economic and fiscal policy, said he believes the policies will develop inventive ideas, encourage investment from the private sector and serve as Japan’s “New Deal programs” to help it open the way for the future.

“With the spirit that the year 2021 will be the final opportunity for us to push through drastic reforms of our country’s economy and society, we will do our best so that Japan can take a big step,” Nishimura said.

The world’s third-largest economy saw an annualized real 29.2% shrinkage in the April-June period from the previous quarter.

But the economy showed a sharp rebound the following quarter, expanding an annualized real 22.9%, after the first state of emergency over the virus — which prompted people to stay at home, companies to scale back operations and shops to close — was fully lifted in late May.

Economists now predict Japan will experience a negative economic growth rate again in the January-March period due to the ongoing state of emergency, after moderate growth in the previous quarter.

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