TOKYO: Japanese Prime Minister Shinzo Abe instructed Thursday the government and the ruling camp to compile a second fiscal 2020 supplementary budget in response to the spread of the new coronavirus.

Under the budget, the Abe administration aims to double the maximum amount of employment adjustment subsidies to businesses that put workers on paid leave amid the coronavirus crisis.

The budget is also expected to include financial support measures for midsize and large companies suffering from rapid earnings deterioration.

The government is expected to decide on the size of the budget around May 27, hoping that it will be enacted during the ongoing parliamentary session, slated to end on June 17.

"Another round of measures is necessary to restore normal life," Abe told a meeting of the government's coronavirus response headquarters.

Japan enacted the first fiscal 2020 extra budget, worth 25,691.4 billion yen, on April 30, featuring a uniform 100,000-yen cash handout to citizens and up to 2 million yen in relief for small and midsize businesses hit by sales plunges.

In the second extra budget, the government plans to raise the daily limit of the job adjustment subsidies to around 15,000 yen from the current 8,330 yen.

The government is also considering creating a cash handout program for workers who would not stand to benefit from the job adjustment subsidies.

For businesses having difficulty paying rents, the government will provide financial aid equivalent to two-thirds of the rents for six months.

Lawmakers in the ruling camp are calling for 100,000 yen to 200,000 yen in grants to help students experiencing income drops to pay tuition fees.

At a meeting of its Council on Investments for the Future on Thursday, the government broadly agreed to support midsize and large companies hurt by earnings deterioration through government-affiliated financial institutions.

Specifically, the lenders, including the Development Bank of Japan, will extend subordinated loans, which can be partly treated as capital, to such companies.

The government will also consider extending the deadline for applications for bank recapitalization funds from March 2022 to help financial institutions that provide assistance to struggling companies aggressively.

The government started working on compiling the second supplementary budget only two weeks after the enactment of the first one.

Many measures being considered for the second extra budget "should have been included in the first budget," said Taro Saito, head of the NLI Research Institute's Economic Research Department.

JIJI Press