The Japanese eye has registered a stimulus package, countering the downward trend in the world

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – Japan on Friday will set a record $ 488 billion spending package to alleviate the economic impact of the COVID-19 pandemic, tackle a global trend to remove crisis-type incentive measures and add to strained already hurt finances.

Expenditures have risen from a range of payments, including those criticized as unrelated to the pandemic, such as donating money to the homes of young people aged 18 and under, and will likely lead to additional bond issuance this year, analysts said.

Massive spending would underscore Prime Minister Fumio Kishida’s decision – once seen as in favor of a fiscal cut – to focus on economic readjustment and redistribution of wealth to households.

“The reflective monetary policy and fiscal policy of Shinzo Abe (former prime minister) today is orthodoxy today,” said Teneo analyst James Brady.

“While Kishida has been known for being a bit of a hawk in the past, it looks like the Abenomics paradigm will continue for many more years to come.”

Bond yields rose on Thursday when the newspaper reported that the new stimulus package would include a record spending of about 55.7 trillion yen ($ 488 billion), much higher than the market’s estimated 30-40 trillion yen.

The entire package, which includes funds that do not incur immediate spending, is likely to reach 78.9 trillion yen, the source said, citing the source.

Kishida will announce the package later on Friday and will form an additional budget of about 32 trillion yen expected to fund part of the cost, Asahi Shimbun newspaper reported on Friday.

In addition to issuing the debt, the government will use 4.5 trillion yen saved for pandemic emergency spending, the newspaper said.

Japan has delayed other economies from emerging from pandemic-induced gaps, forcing policymakers to maintain massive fiscal and monetary support, while other advanced nations are pushing back crisis-like policies.

Policymakers hope the new spending will help boost the economy, driven by pandemic cuts and global supply disruptions, which were more than expected in the third quarter, due to consumption and exports.

Japan’s three spending packages to deal with the pandemic have left a significant long-term debt double the size of its $ 5 trillion economy.

($ 1 = $ 114,2400)