Japan Govt. Extra Budget:

 Article Source:  https://mainichi.jp/english/articles/20220517/p2g/00m/0bu/027000c

Article:

TOKYO (Kyodo) -- Japan's Cabinet is set to approve Tuesday a 2.7 trillion yen ($21 billion) draft extra budget for fiscal 2022 to ease the pain of surging energy, food and other prices stemming from Russia's invasion of Ukraine.

Once it clears parliament, the supplementary budget for the year that started in April will be used to finance part of a 6.2 trillion yen relief package compiled in late April.

Ideas:

The Bank of Japan, the central bank, can't do everything to ease the pressure related to inflation. The Japanease government with fiscal strategies also need to find ways to reduce the stress of inflation with whatever it can do.

Yes, many governments globally have already spent a lot because of the covid situation, but this is no time to just sit back and let the economy take its course, as there are a lot in the economy and society who might be suffering still becuase of the covid situation and now the inflation situation.

But the key is making sure its gets to the right people, groups, or businesses that actually need the help, as sometimes there are too many steps involved before it gets to whomever needs the aid.

Article:

About 1.5 trillion yen of the extra budget will be spent to replenish reserve funds which the government is using to implement some of the measures in the relief package such as subsidies for oil wholesalers to bring down retail gasoline prices and cash handouts of 50,000 yen per child for low-income households.

The government said it needed to draw on the reserve funds, which can be spent without parliament approval, to swiftly respond to sharp price rises.

A record 107.60 trillion yen budget for fiscal 2022, enacted in late March, includes 5.5 trillion yen in reserve funds to cope with the COVID-19 pandemic and other emergency purposes.

Ideas:

Any kind of subsidy is good and needed but the problem is as soon as the subsidy is implemented oil and gas prices will again go up which means oil wholesalers will need even more help.

Low-income households are even more stressed as food prices keep going up. So the 50,000 is a good start but as food prices and other daily necessities keep going up there might be the need for even more cash handouts, meaning not just once as inflation doesn't look to be ending any time soon.

A 50,000 handout is good but its not going to go very far. Most likely it might last one or two weeks only and then households might need another one soon.

Article:

The remaining 1.2 trillion yen of the extra budget is earmarked to extend the current subsidy program for oil wholesalers until the end of September.

Fuel prices have been rising as the global economy recovers from the coronavirus pandemic fallout, but the pace accelerated on supply concerns following Russia's invasion of Ukraine in late February.

Prices of grain such as wheat, of which Russia and Ukraine are major producers, have also risen sharply.

Ideas:

First was the pandemic, and then shipping and deivery challenges, and now there is the Ukraine situation and inflation which is hitting everything.

So the Japanese government as a lot to deal with as its not just one area but multiple challenges as the same time hitting the Japanese economy and society.

The oil subsidies might be good for today but if the Japanese government has projected what inflation might be in September or what the effects might be in September, what has been earmarked might not be enough by the time September arrives.

And of course don't forget about the effects of the weak Japanese yen and how its effecting importes and import prics which makes the challenges even more challenging.

Article:

The ruling Liberal Democratic Party and its junior coalition partner Komeito are aiming to start Diet debate on the draft extra budget on May 25 to enact it by the end of this month, a coalition source said. The current regular Diet session ends on June 15.

The supplementary budget is expected to entail a new government bond issuance, causing further deterioration to the nation's fiscal health.

The balance of long-term Japanese government debt stood at a record 1,017.1 trillion yen at the end of fiscal 2021.

Ideas:

The fiscal health of Japanese economy or the Japanese budget should not be a priority at this time.

Yes its important but when the economy has as many challenges it has now with the eonomy not back to normal from the pandemic and other factors involved its not the time to worry about the debt to GDP ratio.

There are just too many that need help when you combine all that is happening.

Its not the time to just say let the economy take care of itself, as there are too many groups that have a long way to go before they see any relief from the pandemic, the inflation situation, the weak yen situation and so on.

The Japanese government has always been a big spending government when needed and now is the time to spend and help the economy, businesses, households, and society as much as it can.

Have a nice day and be safe!