Japan’s stimulus package spending to hit record $ 488 billion – Nikkei

A Japanese yen note can be seen in this illustrative photo taken on June 1, 2017. REUTERS / Thomas White / Illustration

  • Package Size Inflated By Huge Cash Payments – Nikkei
  • The government should issue new debt to finance spending
  • Payments, grants must be delivered quickly – source
  • The government will announce the package on Friday

TOKYO, Nov. 18 (Reuters) – Japan’s new stimulus package will include record spending of around $ 488 billion due to huge payments to cushion the economic blow from the COVID-19 pandemic, the newspaper reported on Thursday Nikkei.

The massive spending would underline Prime Minister Fumio Kishida’s determination to focus on reviving the economy and redistributing wealth to households and small businesses still suffering the pain of the coronavirus pandemic.

The government will likely issue new debt to fund part of the 55.7 trillion yen ($ 488 billion) spending, which would exceed the two big packages compiled last year, the newspaper said without citing sources.

The total amount, which includes funds that do not lead to immediate spending, will likely reach 78.9 trillion yen, the Nikkei said.

Government and ruling party officials are finalizing details of the package, which is due to be announced on Friday.

“Payments and subsidies must be made as quickly as possible,” a government source told Reuters, adding that the boost to economic growth from the package would likely start to show in the January-March quarter.

Japan’s Nikkei stock average (.N225) turned positive after the Nikkei report, as the spend size was much larger than the 40 trillion yen expected by the markets. It closed 0.3% lower at 29,598.66 on Thursday.

Analysts, however, were skeptical whether the stimulus can provide a lasting boost to stocks and the economy.

“What’s important is the content of the whole, for example how closely it relates to a growth strategy. If that portion is small, the stock markets won’t view it very favorably,” Shingo said. Ide, chief strategist at NLI Research. Institute.

Japan has lagged behind other economies in pulling out of the pandemic-induced doldrums, forcing policymakers to maintain massive fiscal and monetary support even as other advanced countries abandon crisis policies.

Policymakers hope the new spending will help support the economy, which shrank more than expected in the third quarter due to the impact on consumption and exports of pandemic brakes and global supply disruptions. Read more

The package will mainly consist of cash payments to families with children, low-income households and businesses under pressure from the pandemic, according to a project seen by Reuters.

The markets are focused on how much debt the government will issue in this year’s Supplementary Budget.

“Even if the government issues new debt, it will probably reach around 20 trillion yen. This is an amount that can be easily absorbed by the markets,” said Hiroaki Muto, economist at Sumitomo Life Insurance.

“The Bank of Japan controls the yield curve so that interest rates do not rise, which means it essentially commits to buying an unlimited amount of government debt.”

Japan has already rolled out pandemic-related stimulus packages worth a combined $ 3 trillion – about two-thirds the size of its economy – that have added strain to its shattered finances.

($ 1 = 114,0600 yen)

Reporting by Leika Kihara and Tetsushi Kajimoto; Additional reporting by Kaori Kaneko, Kantaro Komiya, Daniel Leussink and Noriyuki Hirata Editing by Chang-Ran Kim, Kim Coghill and Sam Holmes

Our Standards: Thomson Reuters Trust Principles.


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