TOKYO: Japan's Cabinet approved its first extra budget for the fiscal year on Friday November 26 with spending worth US $313 billion to cushion the blow from the COVID- 19 epidemic, as the country keeps its stimulus taps open even as other economies close theirs.
The extra budget contains cash payouts to households with children and financial support for corporations, despite the image of Prime Minister Fumio Kishida as a fiscal hawk.
Kishida wants to encourage citizens to share the fruit of growth under a wealth distribution policy dubbed new capitalism, so he prioritizes economic growth over fiscal reform in the near-term. The industrial world's heaviest debt burden will be hampered by the addition of 36 trillion yen US $312.09 billion in spending, which will be financed by additional government bonds worth 22 trillion yen.
Kishida's government will compile an annual state budget for fiscal 202223 next month, aiming to implement seamless spending over a 16 month period.
The budgets are aimed at boosting growth in the green and digital sectors and strengthening chip factories, while the ruling bloc debated on Friday on an annual tax code revision focusing on measures such as tax incentives to encourage wage hikes.
The government allocated 774 billion yen for boosting chip output in the extra budget, including a fund worth 617 billion yen to back production bases over multiple years.
Kishida's Cabinet unveiled a record 55.7 trillion yen economic package last week, which has a record 55.7 trillion yen in spending.
The finance ministry will keep market issuance of interest-bearing government bonds JGB unchanged, as it reviews its issuance plan for this fiscal year after new stimulus.