Column Finance and the Social Security System 2020.03.21
【Aging, safety net and fiscal crisis in Japan】No.217: Emergency Economic Measures in Response to COVID-19 are decorated
In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.
On April 7 2020, Prime Minister Abe announced the "Emergency Economic Measures in Response to COVID-19." The emergency stimulus reached JPY 108 trillion (US$ 1 trillion), and included the provision of JPY 300,000 (US$ 2,780) for each person in need (totaling JPY 4 trillion). However, this was met with criticism because the conditions that made someone eligible to receive JPY 300,000 were not clear. Therefore, Prime Minister Abe instead decided to give JPY 100,000 (US$ 926) to each person (totaling JPY 12.9 trillion). As a result, the scale of these economic measures increased from JPY 108 trillion to JPY 117.1 trillion.
Although JPY 117.1 trillion is the scale of the program, the actual fiscal expenditure is JPY 48.4 trillion. Moreover, the amount of new money issued by deficit-financing bonds for the supplementary budget is JPY 25.6 trillion. Of JPY 68.7 trillion, which is the difference between the scale of the program and the fiscal expenditure, JPY 58 trillion was allocated to maintaining employment and supporting businesses. This figure included measures such as supporting businesses from financial institutions and postponing tax payment deadlines. This may be useful in temporarily helping small and medium sized businesses that are at risk of bankruptcy. However, such businesses will be responsible for paying once the crisis is over.
Table 1 shows the content of the supplementary budget. Prime Minister Abe began to distribute two cloth masks to 50 million households. As a first step, cloth masks were distributed to pregnant women from April 20, but many defective products (for example, those that were contaminated by dirt and insects) were found. Regarding the JPY 100,000 benefit, there is also the concern that elderly people with dementia, internet cafe refugees who do not have an address, and mothers and children who have left their homes due to domestic violence cannot be paid quickly. If the benefits are delayed beyond July, the Abe administration will lose a lot of credit from people.
Table 1: Breakdown of financial expenditure
*Please click the table image to find the original size image.
(Note) FILP = Fiscal Investment and Loan Program
The totals do not necessarily match due to the rounding of figures.
(Source: Publication based on Cabinet Decisions)