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With elections coming and the pandemic yet to be quashed, a record annual budget of ¥106.6 trillion passed Friday by the Diet is likely to be just the start for a government that already has the developed world’s heaviest debt burden.

Japan’s spending plan for the year beginning in April represents a 3.8% increase from 2020’s initial budget. Actual spending could rise higher, given Japan’s repeated use of extra budgets, three of which were drafted last year to fight the coronavirus, adding ¥73 trillion to the debt pile.

Still, the government is unlikely to add as much spending as it did at the height of the COVID-19 crisis. With the economy seen to be recovering from the latest state of emergency, there is less urgency to put together an extra budget within a month of the annual budget as happened last year.

"We’re not thinking about immediately putting another extra budget together, that’s a given,” Finance Minister Taro Aso told reporters after the budget’s passage. "For the moment, we don’t expect the situation to get markedly worse than what we’re forecasting.”

While Aso continues to play down the likelihood of an extra budget, some ruling party lawmakers are calling for more stimulus along the lines of the massive aid package adopted this month in the United States.

A ¥5 trillion virus reserve fund in the latest budget gives Prime Minister Yoshihide Suga some stimulus ammunition, but economists expect at least one more round before a general election that’s set to happen by fall. With the Tokyo Summer Olympics just months away, a bigger outbreak of the virus would likely trigger more, sooner.

"I’m certain there’ll be another extra budget in the autumn, and we might even have more in the spring or right before the election,” said economist Shunsuke Kobayashi at Mizuho Securities Co. "If we end up having to do restrictions for another year and need to support wages, that’s a huge amount of money and what we have now won’t be enough.”

Economist Atsushi Takeda at Itochu Research Institute said virus containment measures for the Summer Games and more aid to businesses that have heeded government’s calls for reduced hours could end up costing more.

The government ended the virus emergency in Tokyo and surrounding prefectures on March 21, the last region to have restrictions lifted, but an uptick in new infections is keeping officials cautious. Restaurants and bars are being asked to continue closing early.

Suga’s signature Go To Travel program, a discount campaign that was suspended late last year, could also need more funding when it’s finally reinstated. There’s some unspent money for the campaign leftover in last year’s budget, but the travel industry may need an extra fillip now that overseas fans have been barred from the games.

"Looking back at what Suga’s done so far, he’s surely thinking about tourism and regional support,” said Itochu’s Takeda. "He may have to make a move ahead of the elections.”

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