Japan unveils $4-b package to prop up economy

Reuters Tokyo | Updated on March 10, 2020

Finmin Aso says no need yet for extra budget

Japan unveiled on Tuesday a second package of measures worth about $4 billion in spending to cope with the fallout of the coronavirus outbreak, focussing on support to small and mid-sized firms, as concerns mount about risks to the fragile economy.

The package, totalling ¥430.8 billion ($4.1 billion) in spending, shows how much pressure policymakers are under to bolster fragile growth and stem the risk of corporate bankruptcies, as event cancellations and a slump in tourism threaten to hit the broader economy hard. To help fund the package, the government will tap the rest of this fiscal year’s budget reserve of about ¥270 billion, said Japanese Prime Minister Shinzo Abe. The move is likely to affect what the Bank of Japan decides at its March 18-19 policy review. The central bank will aim to ensure that companies hit by the virus outbreak do not face a financial squeeze before the end of the current fiscal year in March, Reuters reported.

Finance Minister Taro Aso said on Tuesday there was no need yet for a bigger extra budget, adding that the fallout from the outbreak so far had not reached the scale of the 2009 financial crisis. “We need to ascertain the current situation,” Aso told reporters after a cabinet meeting, adding “There’s no saying” whether the government needs an extra budget. As well as support for businesses, the new package will fund improvements to medical facilities and provide subsidies to working parents who must take leave because of closed schools.

Published on March 10, 2020

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