Japan looking to end Tokyo's state of emergency, eyes fresh $930 bln stimulus

TOKYO — Japan is looking to lift a state of emergency for Tokyo and remaining areas still facing restrictions while also considering fresh stimulus worth almost $1 trillion to help companies ride out the coronavirus pandemic, Nikkei reported on Monday.

Social distancing curbs were removed for most of the country on May 14 as new infections fell, but the government had kept Tokyo and four other prefectures under watch.

The government will seek approval from key advisers for the lifting on Monday. If approved, Japan would have no regions under the state of emergency, which was first instated on April 7.

Tokyo Governor Yuriko Koike has said the capital would swiftly move into “stage one” of the lifting of curbs if the government ends the state of emergency. That would allow libraries and museums to reopen, and restaurants to stay open until later in the evening. Subsequent stages would see theaters, cinemas and fairgrounds reopen.

While the world’s third-largest economy has escaped an explosive outbreak with some 17,000 infections and 825 deaths so far, the epidemic has tipped it into a recession and plunged Prime Minister Shinzo Abe’s popularity to multi-year lows.

An Asahi newspaper poll conducted at the weekend showed Abe’s support rate at 29% – the lowest since he returned to power in late 2012 – and disapproval at 52%. The results mirrored a Mainichi newspaper survey published on Saturday.

Abe will hold a news conference at 6 p.m. (0900 GMT), where he is expected to announce the plan to lift the emergency state.

To support an economy on track for its deepest slump in postwar history, the government is considering fresh stimulus worth 100 trillion yen ($930 billion), mostly comprising financial aid for companies, the Nikkei newspaper said.

The package, to be funded by a second supplementary budget, would follow a record 117 trillion yen spending plan deployed last month.

The combined spending would bring the total stimulus in response to the pandemic to about 40% of Japan’s gross domestic product.

The new package includes 60 trillion yen to expand loan programs that state-affiliated and private financial institutions offer to firms hit by virus, the Nikkei said. Another 27 trillion yen would be set aside for other aid including capital injections for ailing firms, the paper said.

The government is expected to approve the budget, which will also include subsidies to help companies pay rent and wages, at a cabinet meeting on Wednesday.

Japan’s economy slipped into recession in the last quarter, and analysts expect another 22% contraction in April-June.

The deepening pain from the pandemic is forcing the government to add to Japan’s huge debt pile, which is already twice the size of its economy, to pay for big spending plans.

The Bank of Japan expanded monetary stimulus for the second straight month in April and pledged to buy as many bonds as needed to keep borrowing costs at zero. ($1 = 107.5900 yen) (Reporting by Leika Kihara, additional reporting by Chang-Ran Kim and Sakura Murakami Editing by Sonya Hepinstall and Sam Holmes)