Japan is going all out to help medium to small businesses hurt by COVID-19
The Japanese government unveiled on Tuesday the second package of measures worth about 430.8 billion Yen or 4.11 billion USD in spending to respond to the coronavirus outbreak. Funds are designed to focus on support to small and mid-sized firms.
To help fund the package, the government will tap the rest of this fiscal year’s budget reserve of about 270 billion yen according to Japanese Prime Minister Shinzo Abe said.
The central bank will aim to ensure that companies hit by the virus outbreak do not face a financial squeeze before the end of the current fiscal year in March.
Finance Minister Taro Aso said on Tuesday there was no need yet for a bigger extra budget, adding that the fallout from the outbreak so far had not reached the scale of the 2009 financial crisis.
As well as support for businesses, the new package will fund improvements to medical facilities and provide subsidies of 4,100 yen a day to working parents who must take leave because of closed schools.
Aso said the financing will focus on small and tiny businesses in need of financing over the next two to three weeks.
The financial watchdog has urged credit associations and regional banks to hold hearings with small businesses about their financial situation, he added.
Japan will boost to 1.6 trillion yen its special financing for small- and mid-size firms hit by the virus, up from about 500 billion yen previously announced, Abe said.
As part of the second package, Prime Minister Shinzo Abe has said a government-affiliated lender would offer funds effectively at no interest and without collateral to small firms whose sales slumped in the outbreak.
The world’s third-largest economy shrank by the most since a 2014 sales tax hike in the quarter to December, intensifying fears of an economic downturn in Japan.
The outbreak comes at a critical time for Japan, shattering hopes of a gradual economic recovery fuelled by strong domestic demand just as it prepares to host the Summer Olympic Games in July and August.