Tokyo (AFP)

The lower house of the Japanese Parliament adopted on Wednesday a new extraordinary record budget of approximately 32,000 billion yen (262 billion euros) necessary to fuel a second gigantic plan to support the national economy, severely affected by the pandemic.

More than a third of this windfall is to be used to finance a government fund intended to provide zero-rate loans to small and medium-sized enterprises in difficulty, in addition to new credit mechanisms from the Bank of Japan (BoJ).

The rest should be used to finance various measures, such as helping companies to pay their rents and their employees on short-time work, subsidizing municipalities in crisis, strengthening the health system and medical research, or even offering bonuses to nursing staff, poor students as well as single-parent families.

The budget is expected to be finally approved on Friday by the Upper House of Parliament.

It must form the heart of a second massive support plan for the economy of 117,000 billion yen (958 billion euros at current prices).

This is exactly the same amount as a first support plan announced in early April, which also required a huge budget extension, in particular to finance a flat-rate aid of 100,000 yen (over 800 euros) allocated to each resident of the country.

In total, all of the state aid to support businesses and households in the country should thus reach the astronomical sum of 234,000 billion yen (more than 1,900 billion euros), the majority taking the form of loans. .

- Record debt digging -

Japan has been relatively spared from the health pandemic, with 17,251 cases of contamination identified so far, for 919 deaths.

But faced with an increase in cases and the risk of saturation of hospitals, the government had instituted a state of emergency in the country in April-May, in order to encourage people to stay at home as much as possible and certain shops non-essential to close temporarily.

These preventive measures have completely reduced household consumption, which was already in bad shape before the coronavirus crisis.

Household spending fell 11.1% in April from a year earlier, a record since the start of comparable statistics in January 2001, according to official data released in early June.

This augurs a dizzying fall in Japanese gross domestic product (GDP) in the second quarter, when the country already entered into recession at the start of the year, a first since 2015.

The government intends to finance its exceptional measures by borrowing, the country's public debt should briskly exceed 250% of GDP this year, a new record (against about 240% last year according to the International Monetary Fund).

However "it is worth it to stimulate the economic recovery", Naoya Oshikubo, economist at SuMi Trust, said in a recent note.

Despite its colossal level of debt, Japan continues to borrow without difficulty and at rates close to zero, thanks in particular to the massive bond buyouts carried out by the BoJ.

However, the efficiency of the distribution of public aid, which sometimes comes up against the complexity of the Japanese bureaucracy, raises questions and risks delaying their real effects on the economy.

© 2020 AFP