Japan lower house OKs 29 trillion yen extra budget for inflation relief
Japan’s lower house on Tuesday approved a 28.92 trillion yen ($208 billion) extra budget for the current fiscal year to fund an economic package aimed at softening the negative impact of accelerating inflation and rejuvenate the economy hit by COVID-19.
The government of Prime Minister Fumio Kishida hopes to enact the second supplementary budget for fiscal 2022 by the end of the current parliamentary session until early December.
The draft plan will be deliberated in the House of Councillors following its passage through the powerful House of Representatives.
A key feature of the economic package is to reduce utility bills for households starting next year, targeting electricity and gas. Households on average would save 5,000 yen on monthly utility bills between January and September.
The spending plan also includes government subsidies to oil wholesalers to lower retail gasoline and kerosene prices as winter approaches.
Japanese households have been feeling the pinch of rising prices, mostly driven by higher energy, raw material and food prices.
Behind the rare inflationary pressures in Japan are Russia’s war on Ukraine that has sent energy prices surging, and the yen’s sharp decline that has inflated import costs.
The latest bout of inflation comes as Kishida faces significant challenges since taking office a year ago, amid little signs of a reversal in faltering public support.
Core consumer inflation, now at its highest level in four decades, and resurging COVID-19 cases are clouding the outlook for the world’s third-largest economy.
The government has been increasing fiscal spending to support the economy hit by the coronavirus pandemic and the ramifications of Russia’s aggression in Ukraine.
The economic package entails 39.0 trillion yen in fiscal spending.
The government aims to issue 22.85 trillion yen worth of bonds to secure the necessary funding under the extra budget, further worsening its fiscal health.
Japan’s debt is more than twice the size of its economy.