TOKYO: Japan's Cabinet approved its first extra budget for this fiscal year on Friday (Nov 26) with spending worth US$313 billion to cushion the blow from the COVID-19 pandemic, as the country keeps its stimulus taps open even as other economies close theirs.
Featuring cash payouts to households with children and financial support for corporations, the extra budget contains some elements of populist spending despite the image of Prime Minister Fumio Kishida as a fiscal hawk.
Kishida is prioritising economic growth over fiscal reform near-term to encourage citizens to share the fruit of growth under a wealth distribution policy dubbed "new capitalism."
The extra 36 trillion yen (US$312.09 billion) in spending will be financed by additional government bonds worth 22 trillion yen, straining the industrial world's heaviest debt burden.
Kishida's government will next month compile an annual state budget for fiscal 2022/23, aiming to implement seamless spending over a 16-month period.
The budgets are also targeted at boosting growth in the green and digital sectors and strengthening chip factories, while the ruling bloc on Friday began debate on an annual tax code revision focused on measures such as tax incentives to encourage wage hikes.
The government earmarked 774 billion yen for boosting advanced chip output in the extra budget, including a fund worth 617 billion yen to back production bases over multiple years.
Kishida's Cabinet last week unveiled the 79 trillion yen economic package with 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 following new stimulus.
Of the record 221.4 trillion yen of market issuance, 138.2 trillion yen of interest-bearing bonds will be left unchanged for issuance for the fiscal year ending in March 2022.