Suga promises a stimulus plan focused on the environment and digital innovation
Japanese Prime Minister Yoshihide Suga vowed on Friday to structure a stimulus package aimed at lifting the economy out of the pandemic-generated recession through environmental investment projects and digital innovation. .
“We are defining a package that can rebound our economy while achieving a digitized and carbon neutral society after the pandemic,” Suga said after a meeting with his government’s economic council.
The ruling Liberal Democratic Party (LDP) said in a draft proposal, seen by Reuters on Friday, that the government should create a fund of a size “comparable to global standards” to support companies with investments in green technologies, without suggesting a specific figure.
Suga has said that Japan will reach zero emissions by 2050 and his party’s recommendations will serve as the basis for the government’s discussions on a new fiscal stimulus package, to be designed by the cabinet by order of the prime minister.
The party’s proposal, which suggests incentives to provide investment in green technologies, will be among the pillars of the stimulus plan, along with a spending package that seeks to mitigate the impact of COVID-19. The document will be presented to the government on Monday, according to an LDP source.
“By deploying all available policy resources, the public and private sectors must work together to reach the goal of zero emissions by 2050,” said the draft, which will be subject to changes after the executive’s discussions.
In addition to calling for deregulation and applying tax exemptions, the proposal also calls on the government to expand or create a new state-funded credit program and guarantee schemes to help companies hit by the COVID-19 crisis.
“It appears (that the new package) will clearly fall short of just providing financial support to deal with the pandemic,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “There will be a growing number of measures aimed at shaping a post-COVID-19 society.”
Ruling party officials have called for an additional budget valued at between 20 and 30 billion yen (192 and 288 billion dollars), which could partly finance the stimulus package.