Prime Minister Fumio Kishida’s government aims to set out as early as Friday relief measures including one-off 50,000 yen ($390) cash payouts to low-income households with children, and expanding subsidies to fuel wholesalers, a preliminary document seen by Reuters on Thursday showed.
The governing coalition, which faces upper house elections pencilled in for July 10 as the economy flags and voters struggle to cope with soaring energy costs, also aims to ensure stable supplies of oil and basic foods, according to the draft.
News of the extra budget, whose value the Kyodo news agency estimated at around 2.5 trillion yen ($19.5 billion), was unexpected. Deputy Chief Cabinet Secretary Seiji Kihara said its details were still being worked out.
The package should be approved during the current parliamentary session scheduled to end in June, Toshimitsu Motegi, secretary general at Kishida’s ruling Liberal Democratic Party (LDP), said earlier.
The LDP’s smaller ally, the Komeito party, which endorsed that timetable, said neither party had proposed extending the parliamentary session, its secretary general Keiichi Ishii said.
Covering the extra stimulus might involve additional bond issues, which would further enlarge the industrial world’s heaviest public debt burden, which stands at more than twice annual economic output.
Japan entered a long period of close-to-zero inflation in the early 1990s that determined the way policymakers managed its economy for decades.
Driven by the war in Ukraine and already surging fuel costs, inflation pressure are now building. While core CPI remained low at just 0.6% year on year in February, energy costs rose 20.5% and wholesale inflation reached 9.5% in March.
($1 = 128.1500 yen)
(Reporting by Tetsushi Kajimoto, Kantaro Komiya, Kentaro Sugiyama and Takaya Yamaguchi; Editing by Tom Hogue, Bradley Perrett and John Stonestreet)