Japan to craft extra budget, aiming to ease pain of rising prices

© Kyodo News

Japan's ruling coalition agreed Thursday to seek a 2.5 trillion yen ($19 billion) supplementary budget for fiscal 2022 to cushion the impact of surging energy and food prices spurred by Russia's invasion of Ukraine.

Prime Minister Fumio Kishida is expected to instruct officials to start drafting an extra budget for the year from April and unveil details of an emergency economic package as early as Tuesday, ruling party lawmakers said.

The Liberal Democratic Party and its junior coalition partner Komeito agreed to aim for the submission of a budget plan to parliament in late May to realize its passage before the current Diet session ends on June 15, according to the lawmakers.

The agreement came after the LDP acquiesced to Komeito, which had repeatedly called for an additional budget to be compiled for the current fiscal year to secure enough funding.

The envisaged package is designed to address growing concern about the negative impact of rising prices on households, as Japan's economic recovery from the COVID-19 pandemic lacks vigor and political parties set their sights on the House of Councillors election, expected in July.

Kishida had said the use of reserve funds in the already-passed state budget for fiscal 2022 would be sufficient to fund relief measures.

The LDP was initially cautious about the compilation of an extra budget that would make the parliamentary schedule even tighter, given that an extension of the ongoing ordinary Diet session would affect the timing of the upper house election.

The package would include a 50,000 yen per child cash handout program for low-income households, more subsidies for oil wholesalers to lower retail gasoline prices and financial assistance to struggling smaller firms and livestock farms hit by soaring grain prices, sources with knowledge of the plan said earlier.

Japan has already passed a record 107.60 trillion yen budget for fiscal 2022, with 5.5 trillion yen in reserve funds to cope with the COVID-19 pandemic and other emergency purposes.