Japanese Prime Minister Shinzo Abe has pledged to roll out an unprecedented stimulus package, equal to 20% the size of the economy, vowing to take “all steps” to battle the deepening fallout from the coronavirus pandemic.
The package, which Abe said would be worth around 108 trillion yen ($990 billion), may include a 26-trillion-yen stimulus put in place in December 2019. Direct fiscal spending in the package would amount to 39 trillion yen, Abe said.
The size of the package would exceed the one Japan compiled in the wake of the 2009 financial crisis, which topped 56 trillion yen with direct spending of some 15 trillion yen.
Below are the key measures Abe’s cabinet is expected to approve on Tuesday as part of the stimulus package:
- A cash payout of 300,000 yen for households whose income has been hit by the pandemic.
- Cash payouts to small and mid-sized firms to help them continue business operations.
- Increase employment adjustment subsidies for the small and mid-sized firms as well as big companies, who keep employees on the payroll, to avoid layoffs and bankruptcies.
- Additional 10,000 yen per child for families that receive child allowances. Currently, Japan gives eligible households 15,000 yen a month for infants under three, and up to 15,000 yen for three-year olds to junior high schoolers.
- Triple the production of Fujifilm Holding Corp’s (4901.T) Avigan anti-flu drug during this fiscal year so it can be used to treat some two million people. Avigan is being tested in China as a treatment for COVID-19. [nL1N2BT00K]
- Back funding to secure medical supplies and hospital beds, as well as for the production of masks, vaccines, and infrastructure to promote telecommuting.
- Give local governments an extra subsidy totalling 1 trillion yen to help them shoulder costs such as securing accommodations for people infected with the new virus.
- Establish a reserve fund on infectious diseases to take necessary steps in future.
- Enable cash-strapped small and mid-sized firms to borrow at zero interest without collateral from private financial institutions such as regional banks and credit unions.
- Make use of crisis lending schemes by Development Bank of Japan [DBJPN.UL] and Shoko Chukin Bank [SKCBK.UL] for loans to large corporations.
- Provide airlines with financial support worth 2 trillion yen. Grant them a grace period for payment of landing fees.
- Lowering corporate tax burdens of small and mid-sized companies.
- Exempt firms from taxation on property and assets if their sales more than halve year-on-year in any three-month period between February and October.
- Give small and mid-sized firms one-year grace period for corporate tax payment.
- Expand the scope of loss-making firms subjected to a tax refund.
- Fuel tax breaks for private cars purchased up until March 2021, from the current period through September 2020.