Japan will spend a record 55.7 trillion yen ($488 billion) on an economic stimulus package aimed at easing the impact from the coronavirus pandemic, government sources said Thursday.
The package, including policy measures funded by the private sector such as emergency bank lending to struggling businesses, will be worth 78.9 trillion yen, the sources said. The Cabinet of Prime Minister Fumio Kishida will approve the package on Friday.
Expanded from an earlier plan of around 30 trillion yen, the fiscal spending, also including government "zaito" investment and loan programs as well as local government expenditures, will be larger than the 48.4 trillion yen outlay for a similar package compiled in April last year by Prime Minister Shinzo Abe's administration.
Kishida, who took office last month and led the Liberal Democratic Party to victory in the Oct. 31 general election with a pledge to craft a stimulus package worth "tens of trillions yen," is set to increase support for households and companies in an attempt to meet his goal of redistributing wealth.
Among the key measures in the package are 100,000 yen handouts in cash and vouchers for children aged 18 or younger in households with an income of less than 9.6 million yen, which is expected to cost about 2 trillion yen.
Another 2 trillion yen will be allocated for financial aid for struggling families and students, while small companies reeling from the pandemic are expected to receive financial support of up to 2.5 million yen each.
To boost consumption while promoting use of the unpopular "My Number" identification card system, the government will give shopping points worth up to 20,000 yen to individuals who already have or newly acquire the cards.
To fund the package, the government aims to pass a supplementary budget in an extraordinary parliamentary session to be convened by year-end.
The size of the extra budget for the fiscal year through March is expected to be 31.9 trillion yen, according to the sources.
The government will issue new bonds to partly finance the budget, a move that would worsen Japan's fiscal health, already the worst among major developed countries.
As for other measures, the monthly salaries of care workers, nursery school staff and nurses, whose pay is regulated and widely seen as insufficient compared with other industries, will be raised.
Following a recent sharp drop in the number of coronavirus infections in Japan, the government will also restart the "Go To Travel" subsidy program in an effort to prop up the pandemic-hit tourism sector. The program has been suspended nationwide since December amid the spread of the virus.
To help households and firms suffering from surging prices for gasoline and other oil products, a new subsidy program for oil distributors will be set up to contain prices once they hit a certain threshold.
With the aim of beefing up the nation's economic security, around 500 billion yen will be earmarked to encourage the development of key technologies including artificial intelligence, amid intensifying global competition for advanced technologies and concerns about intellectual property protection.
The government also plans to help create semiconductor production bases amid a prolonged worldwide chip crunch.
Some policy measures under the package will be covered by the initial budget for fiscal 2022, to be drafted next month.