Japan eyes fresh $1.1 trillion stimulus to combat pandemic pain
Japan will compile a new $1.1 trillion stimulus package that includes significant direct spending, to stop the coronavirus pandemic pushing the world's third-largest economy deeper into recession, a budget draft seen by Reuters showed on Wednesday.
The 117 trillion yen stimulus, which will be funded partly by a second extra budget, will be on top of another 117 trillion package already rolled out last month.
The new package puts the total amount Japan spends to combat the virus fallout at 234 trillion yen ($2.18 trillion)- roughly 40% of Japan's gross domestic product.
The combined spending would also be among the largest fiscal packages to deal with the coronavirus in the world, approaching the size of United States' $2.3 trillion aid programme.
The government's latest package, to be compiled on Wednesday, will include 33 trillion yen in direct spending, the draft showed.
"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 epidemic," Prime Minister Shinzo Abe said in a meeting with ruling party lawmakers on Wednesday.
To fund 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, according to the draft.
That will push new bond issuance for the current fiscal year to a record 90 trillion yen. When including issuance to roll over debt maturing during the year, Japan's total issuance for the year would hit a record, exceeding 200 trillion yen and further straining the country's already tattered finances.