Japan's cabinet to tap emergency budget reserve

Japan's cabinet decided on Friday to tap emergency budget reserve worth 549.18113 bln yen on coronavirus responses to back supply chain, farmers and job subsidy, Reuters news has reported. 

That leaves 7.28 trillion yen in reserves out of a total 11.5 trillion yen originally earmarked to combat the health crisis.

The spending includes funds for supporting medical facilities, the government said.

"It's because there were many applications. There won't be an expansion of the policy itself," the official told Reuters on condition of anonymity because he was not authorised to speak to the media.

Reuters key notes:

''Through the programme, the government subsidises manufacturers to bring production back and reduce the risks of making goods such as electronics parts or medical equipment only in a select number of countries.''

''The trade ministry said in August it had received 1,670 applications worth about 1.764 trillion yen - about 11 times the remaining amount in the budget for the programme - for a second round of the programme, after ending a first, smaller round in June. It will announce which companies were successful in the second round this month.''

''The government will also allocate funds from the emergency reserve to extend an employment subsidy rolled out in response to the coronavirus pandemic, the official said. The government had decided in August to extend the subsidy from end-September to year-end.''

This follows that last time that the Japanese government approved September's spending of 1.639 trillion yen ($15.51 billion) from emergency budget reserves for coronavirus countermeasures.

There is no market impact on the news, but the stimulus is required to keep risk appetite up. 

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