Japan's parliament is set to enact a 25.69 trillion yen ($240 billion) supplementary budget for fiscal 2020 on Thursday to finance an emergency package to cushion the economy from the impact of the coronavirus pandemic.
The House of Councillors is expected to approve the extra budget following its passage by the House of Representatives the previous day, amid growing speculation that Prime Minister Shinzo Abe will decide to extend the nationwide state of emergency that is due to end next Wednesday.
Adopted by the Cabinet last week, the supplementary budget for the year through next March was boosted in size from an original 16.81 trillion yen after a sudden policy shift by Abe to provide 100,000 yen to all residents in Japan. The move came after an earlier plan to give 300,000 yen each to households whose income has fallen sharply met criticism.
The extra budget has been drafted to partially fund a 117.1 trillion yen economic package, which was scaled up from 108.2 trillion yen as the new cash handout program for the some 126 million people in Japan requires an additional 8.88 trillion yen.
The total size of the economic package far exceeds the emergency package worth 56.8 trillion yen compiled in April 2009 at the time of the global financial crisis.
Entailing 48.4 trillion yen in direct fiscal spending, including by local governments, the stimulus also contains loan programs and deferred tax payments. To fund it, the government will issue deficit-covering bonds worth 23.36 trillion yen.
On April 17, Abe replaced the plan to give cash to struggling households only with a universal handout after yielding to pressure from Komeito, the junior coalition partner of his ruling Liberal Democratic Party.
The revision came a day after the government expanded the state of emergency beyond Tokyo, Osaka and five other prefectures to all 47 prefectures in an attempt to impede the spread of the virus as infection cases and fatalities mounted.
Since Abe's initial emergency declaration on April 7, the government has asked businesses to suspend operations and people to avoid nonessential outings. The measures, however, do not go as far as the hard lockdowns seen in some other countries.
Among other measures in the package are subsidies of up to 2 million yen for sole proprietors, including freelancers, and midsize companies whose revenues have dropped significantly due to the pandemic.
The government will also grant special subsidies worth 1 trillion yen to local governments so they can financially support companies that comply with authorities' requests to suspend operations under the state of emergency.
About 13.9 billion yen will be earmarked to triple the national stockpile of the anti-influenza drug Avigan, which may be effective in treating the pneumonic disease caused by the coronavirus. The stockpile will be enough for treating 2 million people.
Developed by a group firm of Fujifilm Holdings Corp., the drug is being tested as a treatment for COVID-19 after studies in China suggested its efficacy.