Factbox: What does Japan’s record $ 490 billion stimulus package look like?

Nov. 19 (Reuters) – Japan to compile record $ 490 billion spending program on Friday to cushion the economic blow from the COVID-19 pandemic, bucking a global trend to withdraw measures stimulus in crisis mode and the worsening of its already tattered finances.

The 56 trillion yen ($ 490 billion) package, the first to be compiled by Prime Minister Fumio Kishida, will reflect the Prime Minister’s emphasis on distributing more wealth to households. The government will announce the details later Friday.

Below is the gist based on a draft obtained by Reuters and national media reports:

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KEY COMPONENTS AND FINANCING

* The package will include four pillars: 22.1 trillion yen to increase the number of hospital beds and medical supplies, 9.2 trillion yen for vaccine development and other measures to prepare for the next wave of the pandemic , 19.8 trillion yen for household cash payments and subsidies to boost domestic chip production; and 4.6 trillion yen for public works and disaster relief projects.

* Of the 55.7 trillion yen expected in total spending, 31.9 trillion yen will be funded by a supplementary budget that will be submitted to parliament this year. The rest will be written into the state budget next year.

* The government will use the remaining 4.5 trillion yen in reserves for emergency pandemic spending, along with money left over from previous stimulus packages to fund part of the cost.

* Much will depend on what the government can muster from these funds. But some analysts and government officials say the new package could force Japan to sell additional bonds worth around 10,000 billion yen.

COVID-19 COUNTERMEASURES

* The government will pay up to 2.5 million yen each to small businesses that have seen sales plummet due to the pandemic, and will extend financial support through state-guaranteed loans until next March.

* Families with children aged 18 or under will receive cash payments and consumption coupons totaling 100,000 yen per child under a program that sets an annual income cap of 9.6 million yen. It will cost the government around 2,000 billion yen.

* Japan will resume a rebate campaign promoting domestic tourism as early as January to help hotels and airlines affected by the pandemic.

OTHER EXPENSES

* The government will subsidize oil refiners in hopes of capping wholesale gasoline and fuel prices to cushion the blow to households and businesses from rising oil prices.

* Japan plans to allocate a record 770 billion yen for defense in the supplementary budget amid concerns over the Chinese military in the disputed East China Sea. Read more

GROWTH STRATEGY

* The government will create a fund of 10,000 billion yen for universities to be devoted to technological and scientific research.

* It will set aside 500 billion yen in subsidies and craft legislation to build national potato chips factories and strengthen supply chains. It also aims to stimulate private investment in the production of accumulators.

* It will pledge to strengthen tax breaks to encourage companies to raise workers’ wages and increase state-set wages for nurses, medical workers and nursing home staff.

* Japan will set up a green innovation fund and pursue regulatory reform to achieve carbon neutrality in 2050.

* It will subsidize the purchase of electric vehicles and will commit to making them counted for all new cars sold in 2035. It will also promote the development of infrastructure such as electric and hydrogen charging stations.

* The government will strive to achieve “digital” cities in which technology makes working arrangements more flexible and develops local 5G networks, data centers and drone delivery networks.

($ 1 = 114.2500 yen)

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Reporting by Tetsushi Kajimoto, Daniel Leussink and Leika Kihara; Editing by Stephen Coates

Our Standards: Thomson Reuters Trust Principles.

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