(Bloomberg) -- Japanese Prime Minister Shigeru Ishiba’s government is planning ¥30,000 ($192) cash handouts to help low-income households cope with higher prices as it fleshes out the details of an upcoming economic package, according to the latest draft of the plans seen by Bloomberg.
In addition to the ¥30,000 handouts, the government plans to give low-income households an extra ¥20,000 per child, according to the updated proposals seen Thursday. The government also plans to reinstate subsidies for electricity and gas bills from January through March. The cabinet office declined to comment on the proposed plans.
Ishiba called for the package before last month’s snap election as he seeks to address voters’ dissatisfaction with a cost-of-living crunch, boost growth and support the chip industry.
While additional spending packages have largely become an annual occurrence in Japan, the ability of Ishiba’s weakened minority government to deliver this year’s measures is under close scrutiny.
The package is still subject to change, as it’s yet to incorporate some of the policy proposals from the Democratic Party for the People, a key opposition party courted by the ruling coalition to shore up its ability to pass legislation.
The DPP is pushing to raise the tax-free income ceiling from ¥1.03 million to ¥1.78 million through negotiations with the ruling Liberal Democratic Party and its coalition partner Komeito.
The draft outlined the breakdown of more than ¥10 trillion of support previously announced for the semiconductor and artificial intelligence sectors. About ¥6 trillion will be allocated to next generation chip development and supporting mass production of power chips, and at least ¥4 trillion will be used to offer financial support via investment or debt guarantees.
Ishiba earlier said the spending aims to generate over ¥50 trillion in public and private investment over the next decade.
The prime minister has already said that this year’s package of spending measures will be larger in size than last year’s. The extra budget that funded the package a year ago came to ¥13 trillion.
The extra spending adds to concerns about increasing fiscal pressure on a government that already has the world’s largest debt load for an advanced economy. Japan’s public debt reached 255% of its gross domestic product in 2024, according to the International Monetary Fund. The country’s annual debt servicing costs already account for around a quarter of the regular annual budget, and are set to rise further as interest rates go up.
The cabinet aims to approve the stimulus plan next week after the prime minister comes back from a series of leaders’ summits in South America and pass the extra budget through parliament by the end of the year, according to local media.
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