Japan lawmakers approve record extra budget to boost post-Covid growth

The supplementary budget includes cash handouts for families with children, subsidies for small businesses and pay rises for nurses and caregivers.

Prime Minister Fumio Kishida said his first extra budget was aimed at restoring the Covid-hit economy. (Eugene Hoshiko / AP)

Japan's parliament has approved the first extra budget of the 2021 fiscal year, with a record spending of $317 billion (36 trillion yen), to help the economy withstand the fallout of Covid-19, further straining the industrial world's heaviest debt burdens.

Monday's approved budget earmarks funds for tackling Covid-19, including to secure vaccines and drugs, while it also features cash payouts for families with children and funds for the promotion of tourism.

The budget also includes subsidies for small businesses, and pay rises for nurses and care-givers.

Prime Minister Fumio Kishida said his first extra budget was aimed at restoring the Covid-hit economy and achieving a virtuous cycle of growth and wealth distribution while fixing the country's public finances in the long run.

The budget is also targeted at promoting tourism, ensuring corporate funding, boosting growth in the green and digital transformation and strengthening semiconductor factories and supply chains.

It will also be a source of funding for the government's record $695 billion (79 trillion yen) economic package unveiled last month.

Economic package prospects

The government says the package, which includes a record $490 billion (55.7 trillion yen) in spending, will boost gross domestic product by around 5.6 percent – an estimate private-sector economists say is too optimistic.

The extra budget will be followed by an annual budget for the next fiscal year, to be compiled later this week, securing 16-months' worth of spending.

The budget will be partly financed by some $193 billion (22 trillion yen) worth of additional government bonds to be issued in the current fiscal year.

It is the biggest supplementary budget the government has implemented ever. Japan's government issued three extra budgets in the last fiscal year.

Source: Reuters

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