JAKARTA (TheInsiderStories) – Japanese government is considering a new stimulus package worth more than JPY100 trillion (US$928.76 billion) for a second additional budget in this year following a record expenditure plan of $1.1 trillion released last month, the officials announced on Friday (05/22). The funds will use to dampen the effect of the COVID-19 pandemic on the economy on track amid a deep recession.
The government is expected to approve the budget on a cabinet meeting on Wednesday. The world third largest economy ended emergency actions for most of the region and plans to hold a panel discussion today to decide whether to revoke their emergency actions in the remaining places, including the Tokyo metropolitan area.
In a joint statement, finance minister Taro Aso and Bank of Japan’ (BoJ) governor Haruhiko Koroda stated, that the economy is in very bad condition and must get out of this situation immediately. He said, the additional budget, will cover JPY60 trillion to expand the loan program offered by state financial institutions and affiliates to companies affected by the virus.
Then, JPY27 trillion will be set aside for other financial assistance programs, including JPY15 trillion for new programs to inject capital into sick companies. According to them, the Japanese government and the BoJ have in mutual cooperation, aggressively carried out various measures to ensure smooth corporate financing and maintain stability in financial markets, thereby supporting the overall economic activities.
The said, the government has been swiftly implementing the emergency economic measures amounting to JPY117 trillion and the first supplementary budget both of which were decided in April, providing strong measures for supporting financing of firms with the total amount of JPY45 trillion, including schemes enabling interest-free loans without collateral through both government-affiliated and private financial institutions.
Furthermore, based on the directions by the Prime Minister Sinzo Abe, the second supplementary budget is under compilation, including measures to strengthen the financial functions such as increasing liquidity support and making use of quasi-capital instruments. The central bank will actively support financing mainly of firms through the Special Program to Support Financing in Response to the COVID-19 with the total size of JPY75 trillion.
In addition, with a view to maintaining stability in financial markets, the Bank has been providing ample yen and foreign currency funds without setting upper limits mainly through purchases of Japanese government bonds and the conduct of the US Dollar funds-supplying operations, and has been actively purchasing exchange-traded funds and Japan real estate investment trusts.
Although there are various types of uncertainties at present regarding, for example, the timing of the spread of COVID-19 subsiding and future developments in overseas economies, the Government and the Bank are committed to making every effort to facilitate corporate financing and maintain stability in financial markets through the aforementioned measures and doing whatever it takes to settle the situation, and will work together to bring the Japanese economy back again on the post-pandemic solid growth track.
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