Japan announces Rs644b coronavirus package for its people

TOKYO: Japan on Tuesday announced a second package of measures worth about $4 billion in spending to cope with the fallout to the economy of the coronavirus outbreak, focusing on support for small and mid-sized firms, a British wire service reported.

The package, totalling 430.8 billion yen (Rs644 billion) in spending, shows how much pressure policymakers are under to bolster fragile growth and stem the risk of corporate bankruptcies, as event cancellations and a slump in tourism threaten to hit the broader economy hard.

To help fund the package, the government will tap the rest of this fiscal year’s budget reserve of about 270 billion yen, Prime Minister Shinzo Abe said.

“I’ll carry out necessary and sufficient economic and fiscal management without hesitation or delay, while fully ascertaining economic moves and effects on the people’s livelihoods from now on as well,” Abe said at the end of a meeting of the government’s economic advisory council.

The move is likely to affect what the Bank of Japan decides at its March 18-19 policy review.

The central bank will aim to ensure that companies hit by the virus outbreak do not face a financial squeeze before the end of the current fiscal year in March, Reuters has reported.

Finance Minister Taro Aso said on Tuesday there was no need yet for a bigger extra budget, adding that the fallout from the outbreak so far had not reached the scale of the 2009 financial crisis.

“We need to ascertain the current situation,” Aso told reporters after a cabinet meeting. If was not yet clear if the government needed an extra budget, he said.

As well as support for businesses, the new package will fund improvements to medical facilities, ease the supply and demand of masks, promote working from home, and provide subsidies to working parents who must take leave because of closed schools.

Aso said financing will focus on small and tiny businesses in need of financing over the next two to three weeks.

The financial watchdog has urged credit associations and regional banks to hold hearings with small businesses about their financial situation, he added.

As part of the second package, Abe has said a government-affiliated lender would offer funds effectively at no interest and without collateral to small firms whose sales slumped amid the outbreak.