Tokyo: Japanese Prime Minister Fumio Kishida on Monday said an extra economic package will be compiled by the end of April to soften the blow of soaring prices for crude oil along with other resource.
Kishida told a parliamentary session that the package will function to safeguard the economy’s recovery from the adverse effects of the Covid-19 pandemic, while simultaneously helping households to weather the effects of rising prices, reports Xinhua news agency.
The Japanese yen has recently given way significantly to the US dollar, meaning that prices for imports, including energy-related shipments, have soared with the cost being passed on to regular consumers here.
The current situation in Ukraine and the related energy and economic effects are compounding the situation and beginning to be felt in resource-poor Japan, government officials here have said.
“We are entering a critical phase in reviving an economy damaged by Covid-19,” he added.
For the new fiscal year from April, Japan has enacted a record 107.60 trillion yen ($874 billion) budget, with Kishida keen to expedite spending to counteract the blow to the economy from rising prices and the pandemic.
However, while new bond issuance for the budget will drop to 36.93 trillion yen, debt-servicing costs will stand at 24.34 trillion yen, ensuring Japan’s fiscal health remains the worst among industrialised nations.
This is compounded by Japan’s high dependence on borrowing to finance its ever-increasing spending, and thus will likely take someway beyond Kishida’s target of 2025 to achieve a primary balance surplus.
Kishida has promised to consider activating a “trigger clause” that when oil prices rocket, gasoline taxes would temporarily be cut.
He also announced that subsidies for oil wholesalers will be extended by one month to the end of April to drive down retail prices.