Japan May Set Aside $133-B On New Economic Package

Japan is considering spending just over 20 trillion yen ($133 billion) on a new economic package aimed at helping households cope with accelerating inflation and rejuvenating the pandemic-hit tourism sector, sources familiar with the plan said, Mainichi Japan reported.

Photo Insert: The government plans to secure a few trillion yen from unused funds in the state budget for fiscal 2021 that ended in March and bigger-than-expected tax revenue.

The country's demand remains weak even as the economy has emerged out of the initial COVID-19 fallout, and the slightly north of 20 trillion yen in government spending, to be finalized this month, is designed to boost it.

The Cabinet of Prime Minister Fumio Kishida is expected to make a formal decision next Friday so an extra budget to fund the package can be submitted to parliament, the sources said.

The total size of the package will likely be larger, given that spending by others, such as local governments, will be included. At issue is how the government will secure funds when the country's debt is more than twice the size of the economy.

The government plans to secure a few trillion yen from unused funds in the state budget for fiscal 2021 that ended in March and bigger-than-expected tax revenue, the sources said, adding that the rest will come from issuing government bonds.

Kishida, who has stressed the need for a "bold" package, is focusing on three areas -- steps to cope with inflation and the effect of a weaker yen, spurring wage growth, and rejuvenating growth through investment and reform.

Spending could still increase in response to calls from the ruling Liberal Democratic Party.

LDP policy chief Koichi Hagiuda has said the government should aim for an economic package worth 30 trillion yen to close the country's supply-demand gap of around 15 trillion yen on an annual basis.

Among inflation-relief measures, the government plans to reduce household utility bills, targeting electricity and city gas. Existing subsidies for oil wholesalers to lower gasoline and kerosene prices will be extended beyond December.

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