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The
order will likely intensify debate within the government and the
ruling coalition over the scale of spending and source of
funding, with some lawmakers calling for a package of around 10
trillion yen ($80.61 billion).
"We must respond flexibly to counter the impact on corporate
activity and people's livelihood" from the Ukraine war-driven
spike in raw material prices, Prime Minister Fumio Kishida told
parliament on Monday, announcing his plan to make the order.
Kishida is under pressure, including from his party's ruling
coalition partner Komeito, to compile an extra budget, instead
of relying solely on reserves set aside to cope with
pandemic-related spending.
"We haven't told the prime minister the extra budget must pass
through the current parliament session, though that is what we
have in mind," Komeito executive Keiichi Ishii told reporters
after a meeting with Kishida.
Kishida offered few clues on whether an extra budget would be
considered, saying that the priority was to tap money from
COVID-19 reserves.
Komeito presented Kishida with a proposal on the package that
called for expanding subsidies to industries hit by rising fuel
costs, cutting the gasoline tax as well as steps to mitigate the
impact of rising grain prices.
Rising fuel and raw material prices have dealt an additional
blow to Japan's economy, which has lagged other countries in
making a sustained recovery from the impact of the pandemic.
While a weak yen has historically benefited the export-reliant
economy, the Japanese currency's plunge to six-year lows against
the dollar is now seen as a risk to recovery by inflating rising
import costs.
Political pressure for big fiscal spending is expected to
heighten ahead of an upper house election in the summer, which
Kishida must win to solidify his grip of power within his ruling
Liberal Democratic Party.
($1 = 124.0500 yen)
(Reporting by Kentaro Sugiyama, Kantaro Komiya and Leika Kihara;
Editing by Clarence Fernandez and Bernadette Baum)
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