TOKYO: Japan plans to issue US$192 billion in bonds to help pay for another extra budget in the pandemic, as Prime Minister Fumio Kishida looks to shore up the recovery before next year’s elections, the Nikkei newspaper reported on Wednesday.
Some 6 trillion yen (S$71.2 billion) carried over from previous stimulus and another roughly 6 trillion yen in unexpected tax revenue weren’t enough to cover the general expenditures of a 36 trillion yen extra budget put together to finance Kishida’s stimulus plan, the Nikkei said, without identifying where it got the information, report agencies.
“This is big but not totally unexpected given the size of the economic package,” said Chotaro Morita, chief rates strategist at SMBC Nikko Securities in Tokyo. “The question is how they will spend this much money.”
Kishida, who had been known for being fiscally cautious, surprised investors last week by unveiling a record fiscal package of 56 trillion yen, following a report days earlier that the economy shrank last quarter for the fifth time in eight quarters. Still, with vaccination rates now over 75 per cent and restrictions on economic activity largely lifted, the recovery already looked poised to pick up. At the same time, the government failed to spend more than 30 trillion yen it budgeted for stimulus last year, suggesting that it may be difficult to inject all of the new money into the economy quickly. Japan’s Cabinet is expected Friday to approve the budget and detail its spending priorities.