TOKYO | The lower house of the japanese Parliament on Wednesday approved a new budget extraordinary record of about 32 000 billion yen (399 billion dollars) required to be supplied to a second gigantic plan to support the national economy, severely affected by the pandemic.
More than one-third of this windfall should be used to finance a government fund to provide interest-free loans to small and medium-sized enterprises in difficulty, in addition to new mechanisms of credit from the Bank of Japan (BoJ).
The rest must be used to fund various measures, such as helping firms to pay their rents and their employees in partial unemployment, subsidize municipalities in crisis, strengthen the health system and in medical research, or even offer rewards to the nursing staff, students désargentés as well as to single-parent families.
This budget should be finally approved Friday by the upper House of Parliament.
He must deal with the heart of a second plan of massive support of the economy of 117 000 billion yen (1458 $ billion at current prices).
It is exactly the same amount that a first support plan announced at the beginning of April, which was also in need for a huge budget increase, particularly to fund a lump sum of aid of 100 000 yen (1220 $) attributed to each resident of the country.
In total, the aid of the State to support businesses and households in the country is expected to reach the astronomical sum of 234 000 billion yens (more than 2890 $ billion), most in the form of loans.
Excavation record of the debt
Japan has been relatively unaffected by the pandemic on the health plan, with 17 251 cases of contamination identified to date, 919 dead.
But in the face of a rise in cases and the risk of a saturation of the hospitals, the government had introduced the state of emergency in the country in April-may, in order to encourage people to stay home at the maximum, and some shops not essential to close temporarily.
These preventive measures have been completed to seal the household consumption, which was already poor before the crisis of the sars coronavirus.
Household spending fell by 11.1% in April year on year, a record since the beginning of comparable statistics in January 2001, according to official data published at the beginning of June.
This bodes a sharp drop in the gross domestic product (GDP) nippon in the second quarter, while the country is already in a recession in the beginning of the year, for the first time since 2015.
The government cash to finance its exceptional measures by borrowing, the public debt of the country should blithely exceed 250 % of the GDP this year, a new record (compared to the roughly 240 % last year, according to the international monetary Fund).
However, “it is worth the effort to stimulate the recovery,” economic, had estimated Naoya Oshikubo, economist at SuMi Trust, in a recent note.
In spite of its colossal level of debt, Japan continues to borrow without difficulty and at rates close to zero, in particular thanks to bond purchases massive carried out by the BoJ.
The effectiveness of the distribution of public funding, which sometimes runs to the complexity of the bureaucracy in japan, however, posed question, and the risk of delaying their actual effects on the economy.