Government of Japan set to issue fresh incentive package to combat COVID-19

The Government of Japan will organize a fresh incentive package worth $1.1 trillion that will include a sizable amount of direct spending to support the economic blow from the coronavirus pandemic.

The monetary package, which will be financed partly by a second extra budget, will be on top of a $1.1 trillion package already turned out last month, putting the total amount Japan spends to combat the virus fallout at 234 trillion yen – roughly 40% of Japan’s gross domestic product.

According to the draft, the government’s stimulus will include 33 trillion yen in direct spending. To finance the costs, Japan will issue an additional 31.9 trillion yen in government bonds under the second supplementary budget for the current fiscal year ending in March 2021.

Prime Minister of Japan Shinzo Abe said that “We must protect business and employment by any means in the face of the tough road ahead. We must also take all necessary measures to prepare for another wave of the epidemic.”

Government executives have said the new package will include steps such as increased medical spending, aid to firms striving to pay rent, support for students who lost part-time jobs, and more subsidies to companies hit by collapsing sales.

In the second extra budget, the government will also set aside 10 trillion yen in reserves that can be tapped for emergency spending, the draft showed.

The Government of Japan accumulated a record 117 trillion yen incentive package in April that centered on cash payouts to homes and steps to cope with the urgent damage from the coronavirus pandemic.