The secretary-general of the Japanese Liberal Democratic Party said that a complementary budget for the current fiscal year is needed in order to counter the economic effects of the COVID-19 pandemic.
“If there’s any shortage of funds, we’d like to always respond aggressively including by compiling a supplementary budget,” he said in a television program.
Previously, other government officials have claimed that additional spending would not be needed, as the current reserves would be enough to cover near-term relief spending.
The announcement came after the Japanese parliament approved the US $963 billion budget for the current fiscal year, a 3.8% increase from 2020's initial budget. Many analysts expect actual spending to be higher given the fact that last year the Japanese government approved several extra budgets that ended up increasing debt by 73 billion yen. However, it's highly unlikely that the government will spend as much as it did in the middle of the COVID-19 crisis, now that the economy is recovering.
According to a Japanese government official, the GDP is probably going to grow in the first quarter, mainly due to the fact that the government lifted the state of emergency last month. The recent rise in coronavirus infections is not going to be reflected in the GDP.
So far, 482,867 COVID-19 cases have been reported in Japan, as well as a death toll of 9,221. Cases have been surging as the government struggles with procuring vaccines from foreign manufacturers. Until now, only health care workers have recieved the vaccine, which accounts for less than 1% of the total population.
After its latest monetary policy meeting, the Bank of Japan decided to widen the long-term interest rates band in an attempt to make its monetary policy sustainable. Adding to this, the bank decided to remove its explicit guidance to buy ETFs at a set pace and decided to buy them only when necessary as long as it doesn't surpass the annual 12 trillion yen ceiling.
The bank is currently studying the feasibility of issuing its own digital currency, following other central banks, in an attempt to compete against the alternatives the private sector offers. For now, the bank will be focused on figuring out whether issuing, distributing, and redeeming a cryptocurrency is technically feasible, and afterward, the bank is set to scrutinize more detailed functions.
By 9:46 GMT, the US dollar fell by 0.09% against the Japanese yen to the 110.62 level.