Japan ruling party executive calls for $290 billion stimulus package

• Japan must compile an economic stimulus package worth at least 32-33 trillion yen ($282-$290 billion) to cushion the impact of the pandemic, a senior ruling party official said.
• Such large-scale spending would be needed to fill Japan's output gap and achieve the central bank's 2% inflation target, said Kozo Yamamoto, a former finance ministry official.

Japan must compile an economic stimulus package worth at least 32-33 trillion yen ($282-$290 billion) to cushion the impact of the coronavirus pandemic, a senior ruling party official close to Prime Minister Fumio Kishida said on Thursday.

Such large-scale spending would be needed to fill Japan's output gap and achieve the central bank's 2% inflation target, said Kozo Yamamoto, an architect of former premier Shinzo Abe's "Abenomics" stimulus policies.

"The package can be funded by issuing Japanese government bonds (JGB)," said Yamamoto, now Kishida's associate on economic policy. "The government should issue massive amount of long-term JGBs, which can be purchased aggressively by the central bank."

A former finance ministry official, Yamamoto has been deeply involved in the creation of Abenomics, a mix of massive monetary and fiscal stimulus and a growth strategy deployed in 2013 to pull Japan out of economic stagnation.

Kishida has said he will sustain the stimulus policies of Abenomics, and take additional measures to distribute the wealth more broadly to households.

"What's important first and foremost is to achieve strong economic growth with the three arrows of Abenomics. Only then can we talk about redistribution," said Yamamoto, who added that he exchanges emails frequently with Kishida.

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