June 8, 2020

To take the necessary financial measures in response to COVID-19, we have decided to submit the second draft supplementary budget for FY2020. Before requesting deliberation on it, I would like to outline the second draft supplementary budget.

(Current status of COVID-19 and basic approach to the second supplementary budget for FY2020)

COVID-19 has had a tremendous impact on both domestic and overseas economies. Although socio-economic activities will be resumed while taking measures to prevent the spread of infection, we expect that it will take some time to regain a complete daily life.

Under these circumstances, we will continue to support the people and business operators in difficult situations and secure employment, business, and daily lives. At the same time, we must be fully prepared for the danger of the next epidemic. Based on this idea, the Cabinet has formulated the second supplementary budget for FY2020, with a project scale of approximately 117 trillion yen including approximately 73 trillion yen in fiscal spending to strengthen the first supplementary budget for FY2020.

For the main measures, first, we will fundamentally strengthen support for fixed costs, such as labor costs and rents, by expanding employment adjustment subsidies and creating rent support benefits. Second, in addition to the significant expansion of interest-free and collateral-free loans, we will provide quasi-equity capital and make every possible effort to manage the financing of enterprises. Third, we will put forth all our efforts into supporting local governments by adding medical and long-term care grants and temporary grants. Fourth, in anticipation of the long-term battle in the future, we will further increase the reserve fund for measures against COVID-19 to respond flexibly to changes in the situation and take all possible measures for the future.

(Summary of the second supplementary budget for FY2020)

Next, I would like to outline the second supplementary budget for FY2020.

Regarding the general account, we are planning to add an expenditure of approximately 31.91 trillion yen in total. The budget contains expenses for measures against COVID-19, including approximately 450 billion yen for expenses related to “Enhancing the employment adjustment subsidies”, approximately 11.64 trillion yen for expenses related to “Enhancing financial support”, approximately 2.02 trillion yen for expenses related to “Establishing a rent support grant for SMEs”, approximately 2.99 trillion yen for expenses related to “Supporting medical treatment providers”, approximately 4.71 trillion yen for expenses related to “Other supports”, and 10 trillion yen for expenses related to “Contingency funds for COVID-19”. Furthermore, the budget also includes approximately 100 billion yen to be transferred to the Special Account for the Government Debt Consolidation Fund.

Regarding the financial resources, we have reduced the annual allowance of the Diet members by approximately 2 billion yen. We will issue construction bonds of approximately 9.3 trillion yen and special deficit-financing bonds of approximately 22.61 trillion yen.

As a result, the total general account budget for FY2020 after the second supplement will be approximately 160.26 trillion yen, approximately 31.91 trillion yen more in both revenue and expenditures compared to the general account budget after the first supplement.

Necessary supplements are also made to other account budgets, including the special account budgets. Regarding the Fiscal Investment and Loan Program (FILP), we add approximately 39.43 trillion yen to provide quasi-equity capital and make every possible effort to manage the financing of enterprises, in addition to the significant expansion of interest-free and collateral-free loans.

I wish to explain the addition of a reserve fund of 10 trillion yen for measures against COVID-19. Firstly, if the second and third waves hit and the situation becomes more serious, we will need a budget of approximately 5 trillion yen at least. As for the breakdown, it is necessary to consider fluctuations for a certain range. We estimate one trillion yen for employment maintenance and living support, such as employment adjustment subsidies. We also estimate approximately 2 trillion yen for business continuity, including a subsidy program for sustaining businesses and rent support benefits and approximately 2 trillion yen for strengthening the medical care supply systems, including grants for medical care and long-term care for local governments.

On top of that, we understand that it is difficult to predict how the situation will progress over the long-term battle in the future. For this reason, we have decided to secure an additional reserve fund of approximately 5 trillion yen to take all possible measures to respond promptly and sufficiently, no matter what happens.

We will report the use of this reserve fund to the Diet in a timely and appropriate manner.

(Concluding remarks)

This concludes my explanation of the outline of the second draft supplementary budget for FY2020. I hereby request that the Diet deliberate on this supplementary budget and promptly give its approval.