Japanese authorities announced a massive $490 billion stimulus package that aims to support the nation's dire economic situation amid strained finances that resulted from the devastation of the coronavirus pandemic.
Officials aim to cushion the economic effects of the health crisis using the massive funding to alleviate the aftermath of the country's ballooning spending. The situation was a result of a wide array of payouts that included some that were criticized for being unrelated to the coronavirus pandemic.
$490 Billion Stimulus Package
The Asian nation previously gave cash handouts to households with youth aged 18 or below which could partially cause additional bond issuance this year. The unprecedented stimulus package is expected to underscore Prime Minister Fumio Kishida's resolve to focus on reviving the economy and redistributing wealth to Japanese households.
"The reflationary monetary policy and go-big-or-go-home fiscal policy pioneered by (former Premier) Shinzo Abe is now the orthodoxy. Though Kishida has been known in the past for being somewhat hawkish, he appears set to continue the Abenomics paradigm for several more years," said James Brady, a Teneo analyst, Reuters reported.
Kishida told reporters that the massive stimulus package will have more than enough funds to deliver a sense of security and hope to the people of Japan. While the proposal was scheduled for Cabinet approval later in the day after the official's announcement, it still needs the approval of parliament.
The package would include $880 monetary assistance to households with youth aged 18 or below and financial aid for struggling businesses. The proposal comes as the nation has not had a full lockdown since the start of the coronavirus pandemic. This is primarily due to infection numbers being relatively low compared to other nations. The country's death toll related to the coronavirus was totaled at around 18,000.
However, even before the health crisis, Japan's economy, which is considered to be the third-largest in the world, was struggling. The recently announced stimulus package and its massive funding will drive the nation into more debt by issuing bonds, Fox Business reported.
Japan's Struggling Economy
The stimulus package announcement comes after the Japanese government announced a partial easing of border restrictions this month. Authorities have also lifted nearly all restrictions on its economy due to the decreasing number of coronavirus infections.
The Asian nation has achieved one of the highest vaccination rates among rich nations due to having a reported 76% of its population fully vaccinated against the deadly virus. However, the Japanese government continues to implement a ban on international tourists that results in the stifling of its economic growth.
The stimulus package accounts for roughly 10% of Japan's economic output, said officials, with Prime Minister Kishida saying on Friday that it could increase the country's economic output by about 5.6%. The official said that he wanted to bring Japan's economy into a road to recovery after being severely damaged by the coronavirus pandemic and other factors.
The massive bill would also include programs that will encourage domestic tourism and investment in a nationwide university endowment fund, the New York Times reported.
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