Japan readies $48bn package to ease inflation pain

The government frames the economic package, to be compiled as early as Tuesday, as comprehensive relief measures. But critics see them as a short-term remedy, especially as other countries tackle more fundamental changes on energy and other key economic factors in response to Russia's invasion of Ukraine.

To pay for the package, the government will request 2.7 trillion yen under a supplementary fiscal 2022 budget to be drafted by the end of the current parliamentary session. It will secure another 1.5 trillion yen from its reserve funds.

Together with private-sector contributions, the entire package is expected to total 13.2 trillion yen.

The largest portion of the government's spending -- 1.5 trillion yen -- will fund the response to surging crude oil prices. To limit the increase in gasoline prices, the government will raise its maximum subsidy to oil distributors to 35 yen per liter from 25 yen and extend the program until the end of September.

A total of 1.3 trillion yen is expected go toward small and midsize businesses. Japan will further lower interest rates on loans from government-backed financial institutions to coronavirus-hit smaller businesses, allowing them to borrow money for virtually no interest and with no collateral until the end of September. A new subsidy will be created for companies that are reorganizing operations in response to inflation.

Japan looks to spend another 1.3 trillion yen on programs for low-income households and others in need of assistance. It will provide 50,000 yen per child and will extend help to fishing-, lumber- and wheat-related businesses to ensure a stable supply of energy, materials and food.