Govt adopts FY21 extra budget with record spending

TOKYO (Jiji Press) — The government adopted at an extraordinary Cabinet meeting on Friday a fiscal 2021 draft supplementary budget featuring record general-account spending of ¥35.98 trillion to shore up the coronavirus pandemic-battered economy.

The extra budget, which earmarks ¥31.56 trillion for a package of economic stimulus measures compiled a week before, will be used to finance COVID-19 countermeasures and to realize Prime Minister Fumio Kishida’s key policy of achieving a virtuous cycle of economic growth and wealth redistribution.

The government will submit the draft budget to an extraordinary session of parliament expected to be convened on Dec. 6.

With the add-on spending program, the government’s total expenditures for the current fiscal year to March next year, including the initial budget, will reach ¥142.59 trillion.

The economic package allocates ¥18.6 trillion to prevent COVID-19 from spreading, ¥1.76 trillion for resuming socioeconomic activities, ¥8.25 trillion for initiating a “new form of capitalism” advocated by Kishida, and ¥2.93 trillion for taking disaster management measures and boosting national resilience.

In the supplementary budget, the government will spend ¥1.94 trillion to distribute COVID-19 handouts worth ¥100,000 per child aged under 19, while ¥1.81 trillion will go to a program to grant reward points worth up to ¥20,000 to My Number social security and taxation identification card holders.

Meanwhile, the government set aside ¥260 billion to bring forward wage hikes for nurses, care workers and nursery teachers as part of Kishida’s redistribution policy.

An additional ¥268.5 billion will be spent to restart the government’s Go To Travel domestic tourism promotion campaign, raising total related expenditures in the fiscal year to ¥1.32 trillion.

Also, ¥2.8 trillion will be used for a program to provide up to ¥2.5 million in relief to small companies with sales pushed down by the pandemic.

For COVID-19 countermeasures, ¥2.03 trillion will be added to a program to help medical institutions secure beds, and ¥1.29 trillion will be set aside for COVID-19 vaccinations. The government will increase grants to finance local governments’ coronavirus responses by some ¥6.8 trillion.

Japan is expected to see record tax revenue totaling some ¥63.88 trillion for fiscal 2021, up ¥6.43 trillion from the initial projection, thanks to brisk corporate earnings.

Still, the government will issue a further ¥22.05 trillion in government bonds, as the tax revenue alone is not enough to cover the proposed additional spending. This will raise the issuance amount for new government bonds, excluding refunding bonds, in fiscal 2021 to ¥65.65 trillion.

The government views the draft supplementary budget, the fourth such budget since the pandemic started, and the regular budget for fiscal 2022, which starts in April, as a combined 16-month budget, so that fiscal spending can be made seamlessly between the two fiscal years.