Japanese Prime Minister Fumio Kishida announced a record 56 trillion yen ($ 490 billion) plan to revive the world’s third largest economy after the pandemic.
This stimulus, the third since the start of the pandemic, “it is enough to send a sense of security and hope to the Japanese people“, said In person, whose cabinet must approve the plan in the afternoon.
The package includes several measures, such as cash and coupon payments to families with children under 18 who meet an income cap and a salary increase for nurses and health workers.
The stimulus comes after the economy has contracted more than expected in the last quarter in which Japanese leaders imposed several restrictions in Tokyo and other cities to contain an outbreak of the virus.
Previously, the previous prime ministers, Yoshihide Suga y Shinzo Abe, injected 40 trillion and 38 trillion yen (US $ 350,000 million and US $ 330,000 million in current exchange rate) into the economy in 2020.
“We have been able to build economic measures that will open up the new society after the pandemicKishida said about the negotiations between his cabinet and the coalition that supports him.
According to the prime minister, the 56 trillion yen package goes up to 79 trillion (US $ 690,000 million) considering other items such as loans.
In person he won the recent general election with the promise of an economic stimulus plan following the resignation of his predecessor, Suga, who left office in part because of criticism of his response to the pandemic.
A huge debt
Businesses, especially restaurants and bars, have seen months of changing restrictions on opening hours or alcohol sales regulations since the onset of the pandemic.
In addition, the country’s borders remain closed to tourists, an absence especially evident during the Olympic Games held last summer in Tokyo.
Government data showed an economic contraction of 0.8% between July and September, much worse than expected by market analysts, due to the rebound of the pandemic and problems with global supply chains.
Daily cases have fallen in recent months and now more than 75% of the population is fully vaccinated, thus most restrictions have been lifted.
Economists believe that this stimulus plan can help the recovery, although some media question the efficiency of the money payments and criticized the lack of clarity on how it will be financed.
Japan already has a huge public debt of almost 250% of its Gross Domestic Product, according to the International Monetary Fund (IMF).
The government must explain why this package “is it necessary and what effects do you expect“, said Kengo Sakurada, president of an association of corporate executives this week.
He also pointed out that almost half of the money from the other two implemented plans had not yet been used. “We need government accountability for why it will be successful“, he claimed.
The economist of Daiichi Life Research Institute, Hideo Kumano, I think that “It is a huge plan but its impact on GDP seems limited”.
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