Japan finance minister shrugs off calls for big stimulus spending on pandemic

TOKYO (Reuters) - Japan’s finance minister on Friday brushed aside some ruling party lawmakers’ calls for a big extra stimulus budget, saying the situation was different from earlier this year when massive fiscal support was needed amid a state of emergency.

Japan's newly-appointed Finance Minister Taro Aso speaks at a news conference in Tokyo, Japan, September 16, 2020. REUTERS/Kim Kyung-Hoon/Files

“Now that the state of emergency has been lifted, the situation is different” from when the cash handouts were offered, Finance Minister Taro Aso told reporters after a cabinet meeting, when asked about the lawmakers’ proposal.

“What’s urgently needed is for us to speedily implement measures already adopted to protect jobs, support business continuation and safeguard people’s livelihoods.”

Speculation is rife that the government will roll out more fiscal aid in its battle to contain the COVID-19 pandemic and spur the economy back to pre-pandemic levels.

Local media reported on Tuesday that Prime Minister Yoshihide Suga plans to order his government to compile extra stimulus measures as early as November.

More stimulus would further strain Japan’s debt burden - at more than twice the size of its $5 trillion economy and the industrial world’s heaviest public debt.

Japan has already rolled out a combined $2.2 trillion in two stimulus packages following the health crisis, including 100,000 yen cash payments to each citizen, and small business loans.

On top of that stimulus, Suga’s cabinet decided on Friday to tap emergency budget reserves worth 549 billion yen ($5.2 billion) to support supply chains and farmers and provide job subsidies, confirming Reuters’ report late on Thursday.

That leaves 7.28 trillion yen in reserves out of a total 11.5 trillion yen originally earmarked to combat the health crisis.

Some ruling party lawmakers recently urged the government to compile a 40-trillion-yen third extra budget in addition to the remaining budget reserves, including 50,000-yen cash payouts.

Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Jacqueline Wong