The government is considering issuing additional deficit-financing bonds to fund an emergency economic package that will be compiled as early as April in response to the spread of the new coronavirus, The Yomiuri Shimbun has learned.
The government intends to carry out the issuance by including it in a supplementary draft budget for fiscal 2020, according to sources. If implemented, this will be the first time that deficit-financing government bonds will be issued as part of economic measures since Prime Minister Shinzo Abe began his second administration in 2012.
The government has set aside 500 billion yen as a reserve in the fiscal 2020 draft budget, which is expected to be enacted next week. However, within the government and the ruling parties, there has been a growing opinion that the issuance of deficit-financing government bonds is inevitable as large-scale fiscal spending is necessary, the sources said.
The government last December compiled a package of economic measures to cope with a slowdown in overseas economies and disaster recovery, among other challenges. It managed to secure funds for the measures by issuing construction bonds and using surplus funds.
However, because of the difficulty to project financial resources that may be leftover from the budget and surplus funds, the government is considering issuing additional deficit-financing bonds because it has to draw up an economic stimulus package in April, shortly after the Diet passage of an initial budget.
The government is envisaging economic measures in April for the first time since fiscal 2009 following the collapse of U.S. investment bank Lehman Brothers.
For fiscal reconstruction, the government has set a goal of achieving a surplus in the primary balance of the central and local governments by fiscal 2025. The issuance of additional deficit-financing bonds will make it more difficult to achieve this target, but the government intends to put all its efforts to prevent the economy from bottoming out.
"We'll do everything necessary to shore up the economy," Yasutoshi Nishimura, state minister for economic and fiscal policy, said.
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