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Even before the passage of the budget for the 12 months starting
April 1, Kishida has come under growing pressure from ruling and
opposition lawmakers to compile a fresh stimulus package to
cushion the economic blow of a rise in household bills blamed on
the Ukraine crisis.
"Targeted spending aimed at cushioning the impact from fuel and
food price hikes could be positive for the economy," said Takuya
Hoshino, senior economist at Dai-ichi Life Research Institute.
"The question is how to ensure effective spending."
Parliament approved the government's 107.6 trillion yen ($900
billion) package for fiscal 2022 at the fourth-fastest pace for
any annual budget in postwar history. Lawmakers voiced few
complaints about huge spending to combat the strain imposed on
the world's third-biggest economy by the COVID-19 pandemic.
The government makes it a tacit rule that any talk of an extra
budget - which would be required to finance another spending
package - must wait until the full budget passes Japan's Diet.
With parliament now having approved the fiscal 2022 budget, the
government can more openly debate the likelihood of another
spending package, analysts say.
Kishida said last week the government is ready to take further
steps to cushion the blow from rising energy costs - a nod to
the growing political calls for another stimulus package.
Shortly before the budget passage, his party's secretary-general
Toshimitsu Motegi signalled the need for a fresh stimulus,
saying his party stands ready to take various steps to cushion
the economic blow from rising prices.
Opposition party head Yuichiro Tamaki on Friday called for a
fresh stimulus package worth 20 trillion yen on the assumption
that Japan is already experiencing stagflation.
Additional spending will likely be financed by issuance of
government bonds, Dai-ichi Life's Hoshino said, a move that
would strain Japan's already tattered finances.
The country's economic growth likely ground to a near halt this
quarter as coronavirus curbs and supply disruptions threaten to
derail recovery, a recent Reuters poll of economists showed.
Japan's huge public debt - twice the size of its $5 trillion
economy - constrains the country's ability to boost fiscal
spending to support the economy.
($1 = 119.6000 yen)
(Reporting by Tetsushi Kajimoto; Editing by Kenneth Maxwell)
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