Japan to issue 22 tril. yen in new bonds to fund extra budget

© Kyodo News

Japan has decided to issue new government bonds worth 22.1 trillion yen ($192 billion) to fund an extra budget for the current fiscal year through next March that will help finance an economic stimulus package on the COVID-19 pandemic approved last week, sources close to the matter said Wednesday.

The envisaged supplementary budget of 31.6 trillion yen, which is expected to be approved by the Cabinet on Friday, will be used mainly for coronavirus measures and also securing a stable supply of semiconductors, the sources said.

The issuance of the government bonds means most of the extra budget will be financed by debt, adding a further blow to the country's fiscal health.

The new bond issuance will cover the shortfall in financing the extra budget, even as tax revenue for fiscal 2021 is expected to increase by 6.4 trillion yen from the previous projection and the government also plans to use 6.1 trillion yen that was carried over from the fiscal 2020 budget.

Prime Minister Fumio Kishida's Cabinet approved the stimulus package last Friday with a record 55.7 trillion yen in fiscal spending. The package is worth 78.9 trillion yen when funds from the private sector are included.

Under the planned extra budget, about 5 trillion yen will be allocated in subsidies for restaurants and bars that complied with authorities' requests to cut operating hours or temporarily shut down under either the COVID-19 state of emergency or quasi-emergency.

About 2.8 trillion yen will be used for aiding small companies suffering from the pandemic under a plan to provide financial aid of up to 2.5 million yen each for such firms.

As part of Kishida's policies to beef up the nation's economic security, 617 billion yen will be allocated to support computer chip-making companies. Of that figure, 400 billion yen will be used to aid Taiwan Semiconductor Manufacturing Co. in building a new factory in Kumamoto Prefecture, southwestern Japan.

Separately, 110 billion yen will be given to promoting research and development projects for next-generation semiconductors.

As for measures to tackle rising crude oil costs, 80 billion yen will aid oil wholesalers when gasoline prices surpass a certain level.

About 268.5 billion yen will be used for resuming the government's "Go To Travel" subsidy program designed to prop up the pandemic-hit tourism sector.

Since the program was suspended nationwide in December following a spike in new virus cases, the unused portion of its budget allocation from fiscal 2020 will be used as well.

The government will also include an outlay of 1.8 trillion yen to urge the use of the unpopular "My Number" identification card system by giving shopping points worth up to 20,000 yen to individuals who already have or newly acquired the cards.