TOKYO (Reuters) - Japan’s government is considering a fiscal stimulus package worth roughly 10% of annual economic output to combat the impact of the coronavirus outbreak, the Nikkei newspaper said on Wednesday.
The package, worth more than 56 trillion yen (421 billion pounds), will include cash payouts to households who have seen their income fall due to the epidemic, the paper said without citing sources.
That size of stimulus would put Japan in line with interventions from other major developed countries to fend off the shock from the health crisis that has closed shops and offices, locked down national populations and stretched supply chains close to breaking point.
Cash payouts may start as early as in May, with the government considering offering each eligible household up to 300,000 yen, the Nikkei said.
The government compiled a 26-trillion-yen stimulus package last December to deal with the hit to the export-reliant economy from the U.S.-China trade war.
Since much of that has yet to be spent, the government will divert some to anti-coronavirus measures and provide additional funds up to a total of above 56 trillion yen, the newspaper said.
A supplementary budget to fund the new package will be approved by the cabinet in early April and sent to parliament, aiming for passage later that month, the Nikkei said.
Sources have told Reuters the government is working on a stimulus package worth 30 trillion yen in response to the epidemic, including direct fiscal spending exceeding 15 trillion yen.
Worldwide travel bans and event cancellations including the Tokyo Olympics have placed additional strains on Japan’s economy, which was already on the cusp of recession.
As the government eyes huge spending, the Bank of Japan also stands ready to expand stimulus for a second straight month in April if the pandemic leads to cuts in jobs and capital expenditure big enough to derail prospects of an economic recovery, sources say.
Reporting by Leika Kihara; Editing by Andrew Heavens and John Stonestreet
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