TOKYO -- The Japanese government has begun discussions on an economic stimulus package worth 56 trillion yen ($502 billion) featuring cash handouts to households that have suffered from the impact of the coronavirus outbreak.
The package translates into around 10% of the country's gross domestic product and will be its biggest ever stimulus. In terms of measures for businesses, it will include direct spending by the government as well as loans supplied by financial institutions.
The government is reportedly weighing handouts of about 200,000 to 300,000 yen per eligible household and will aim to begin implementing the measures sometime in May. For businesses that have been hit hard by the coronavirus, such as restaurants and the tourism industry, the government will provide coupons and gift certificates.
Prime Minister Shinzo Abe will likely ask for the stimulus package to be compiled as early as Friday, when the fiscal budget for 2020 will be passed.
Details on the handout process will be hammered out later. The government must decide which households will be eligible to get them and will also have to consider if any income restriction needs to be imposed.
If handed out equally, high income earners and workers with rising incomes will also be eligible. When the government supplied all citizens with 12,000 yen in 2009 after the global financial crisis, the total amount ballooned to 2 trillion yen. Many households stashed the money into savings, which failed to boost consumption. There are around 53 million households in Japan.
The government will consider setting a certain income level that will make about 10 million households eligible. Japan will also expand its employment adjustment subsidies system which supports businesses that give workers days off in an effort to avoid cutting jobs.
Under consideration is raising the subsidy rate for small to mid-sized companies -- currently the equivalent of two-thirds of wages -- to four-fifths.
For restaurants and other tourist-related businesses, Japan will establish a subsidy system to cover a portion of the costs paid by consumers when traveling or eating out.
The new package comes on the heels of one worth 26 trillion yen that was approved by the government in December to prop up Japan's slowing economy.
That package is centered on public sector spending, but implementation has been slow. As an emergency response, some of the still to be executed elements will also be used for coronavirus-related measures. Another 30 trillion yen of assistance, to be put together in the near future, will be added.