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Economy

Size of Japan's virus package rises to record $1.09tn

Increased generosity comes from new plan for $930 handout to every resident

Prime Minister Shinzo Abe came under pressure from ruling coalition partner Komeito to swap out his plan for 300,000 yen handouts specifically for workers harmed by the pandemic. (Photo by Uichiro Kasai) 

TOKYO (Kyodo) -- The government on Monday increased its emergency package to cushion the economy from the coronavirus pandemic fallout to a record 117.1 trillion yen ($1.09 trillion) from 108.2 trillion yen.

The increase came after a sudden policy shift to provide universal cash handouts of 100,000 yen per individual, instead of the original plan to give 300,000 yen to each household whose income had fallen sharply due to the virus outbreak.

Japan's Cabinet approved a fiscal 2020 supplementary budget of about 25.69 trillion yen later in the day to finance the country's largest-ever stimulus, which required a rare reworking as it was revised up from an initial 16.8 trillion yen extra budget adopted on April 7, along with the 108.2 trillion yen package.

Including about 4 trillion yen to cover the 300,000 yen handouts, the initial extra budget would have been submitted to parliament Monday.

Prime Minister Shinzo Abe told a press conference Friday he will replace the original plan with the across-the-board 100,000 yen handouts, after coming under pressure from Komeito, the coalition partner of his ruling Liberal Democratic Party.

The new plan to deliver cash to some 126 million people in Japan requires an additional 8.88 trillion yen, prompting the government to issue deficit-covering bonds worth 23 trillion yen to finance the measure, among other policies included in the extra budget.

The extra budget is expected to be submitted to parliament around April 27, with its enactment likely on May 1, one week later than the government originally scheduled.

The cash handout should start by the end of May, and people will need to apply for the money via mail or online, officials said.

Among other policies in the emergency package are subsidies of up to 2 million yen for sole proprietors, including freelancers, and medium-sized companies whose revenues have dropped significantly due to the virus epidemic.

The government will also extend special subsidies worth 1 trillion yen to local governments so they can financially aid companies that comply with local authorities' requests to suspend operations under the nationwide state of emergency through May 6.

About 13.9 billion yen will be spent to triple the national stockpile of the anti-influenza drug Avigan, to ensure there is enough to treat 2 million people.

The drug, developed by a group firm of Fujifilm Holdings Corp., is being tested as a treatment for the respiratory disease caused by the new coronavirus, after studies in China suggested it is effective in treating COVID-19 patients.

The latest stimulus far exceeds the 56.8 trillion yen emergency package compiled in April 2009 to counter the effects of the global financial crisis that started the previous year. It follows the 26 trillion yen stimulus approved last December to soften the impact of the sales tax rate hike from 8 percent to 10 percent last October.

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