Japan’s parliament on Monday enacted a record ¥36 trillion ($320 billion) supplementary budget for fiscal 2021, partially financing the government’s latest economic package to get the coronavirus pandemic-hit economy back on a solid recovery path.
Lavish spending plans under the first extra budget for the current fiscal year through March highlight Prime Minister Fumio Kishida’s stance of prioritizing economic revitalization — while putting on the back burner, for the time being, restoration of the nation’s fiscal health, which is the worst among advanced economies.
The government will be forced to issue new bonds worth ¥22.1 trillion to cover most of the supplementary budget, with the outstanding balance of government bonds, which need to be cleared by tax revenue, expected to top ¥1 quadrillion by March.
The draft extra budget passed the House of Representatives on Wednesday after being approved by Kishida’s Cabinet late last month.
The budget allocates ¥31.6 trillion for the government’s new stimulus plan, which was revealed in mid-November, with fiscal spending totaling a record ¥55.7 trillion.
With the policy package, Kishida, who took office in early October, will also prepare for another wave of COVID-19 infections that could occur this winter amid fears over the spread of the omicron virus variant.
Of the total, ¥18.6 trillion is earmarked for measures to curb the spread of the virus and support medical institutions, including ¥2 trillion in subsidies to help them secure more beds for COVID-19 patients.
For further promotion of the government’s COVID-19 vaccination program and procurement of drugs for treatment, ¥1.3 trillion and ¥601.9 billion are set aside, respectively.
As a key policy measure in the stimulus package, ¥1.2 trillion will be used for the government’s handout program of ¥100,000 in cash and vouchers for children age 18 or younger in households where the top earner’s annual income is less than ¥9.6 million.
Kishida’s government had originally planned that local governments would provide ¥50,000 in cash first and then the remainder in vouchers, but later decided to allow them to deliver ¥100,000 entirely in cash amid criticism that issuing vouchers would cost more and add to burdens on municipalities.
To prop up the pandemic-stricken domestic tourism sector, ¥268.5 billion is allocated to restart the government’s Go To Travel subsidy program. The scheme was suspended nationwide in December last year following a spike in new virus cases.
Under the extra budget, ¥617 billion is set aside to help chipmaking companies build semiconductor manufacturing bases in the country by funding up to half of the cost.
Taiwan Semiconductor Manufacturing Co. is expected to be the first to receive such assistance when it builds an advanced chipmaking plant in Kumamoto Prefecture.
In addition to the supplementary budget, the economic package will also be financed from the initial budget for fiscal 2022 — expected to be approved by the Cabinet on Friday — along with reserve funds for fiscal 2021 to fight the virus, which the government can use without Diet approval.
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