The Japan Times
Cabinet OKs draft extra budget to ease price pain
The Cabinet approved a ¥2.7 trillion draft extra budget for fiscal 2022 on Tuesday, to ease the pain of surging energy, food and other prices stemming from Russia’s invasion of Ukraine.
Once it clears parliament, the supplementary budget for the fiscal year that started in April will be used to finance part of a ¥6.2 trillion relief package compiled in late April.
About ¥1.5 trillion of the extra budget will be spent to replenish reserve funds that the government is using to implement some of the measures in the relief package such as subsidies for oil wholesalers to bring down retail gasoline prices and cash handouts of ¥50,000 per child for low-income households.
The government said it needed to draw on the reserve funds, which can be spent without parliament approval, to swiftly respond to sharp price rises.
A record ¥107.60 trillion budget for fiscal 2022, enacted in late March, includes ¥5.5 trillion in reserve funds to cope with the COVID-19 pandemic and other emergency purposes.
The remaining ¥1.2 trillion of the extra budget is earmarked to extend the current subsidy program for oil wholesalers until the end of September.
Fuel prices have been rising as the global economy recovers from the coronavirus pandemic fallout, but the pace accelerated on supply concerns following Russia’s invasion of Ukraine in late February.
Prices of grains such as wheat, of which Russia and Ukraine are major producers, have also risen sharply.
The ruling Liberal Democratic Party and its junior coalition partner Komeito are aiming to start a Diet debate on the draft extra budget on May 25 in order to enact it by the end of this month, a coalition source said. The current regular session of the Diet ends June 15.
The supplementary budget is expected to entail a new government bond issuance, causing further deterioration to the nation’s fiscal health.
The balance of long-term Japanese government debt stood at a record ¥1.02 quadrillion at the end of fiscal 2021.