Abe's Resignation May Delay Economic Measures

Tokyo, Aug. 28 (Jiji Press)--As Japanese Prime Minister Shinzo Abe announced a decision Friday to step down, concerns grew over a possible delay in the implementation of a series of economic stimulus measures devised in response to the novel coronavirus crisis. Abe's resignation may also affect the government's relationship with the Bank of Japan, which has worked closely with the Abe administration to prop up the economy and help the country overcome its prolonged deflation. The Abe administration compiled two supplementary budgets for the current fiscal year, which started in April, to implement economic stimulus measures worth an unprecedented 233.9 trillion yen. With the new coronavirus outbreak causing an economic slump, the Abe government has been supporting individuals and businesses. Key measures include a scheme to distribute 100,000 yen per person to all residents in the nation and a benefit program for companies. Despite these measures, Japan's real gross domestic product in April-June plunged 27.8 pct from the preceding quarter on an annualized basis, logging the steepest drop in the postwar period. "The government must not delay its support for people in need," an official of a ministry in charge of economic affairs said. But analysts warned that the economic impacts from Abe's resignation cannot be ignored. The special measure under a program to grant subsidies to companies that furlough employees while paying leave allowances to them is set to expire at the end of September. Although the ruling camp, led by Abe's Liberal Democratic Party, is calling for an expansion of the special measure, the government has yet to secure necessary financial resources. Health minister Katsunobu Kato revealed on Friday a plan to extend the special measure until the end of December. But if a political decision needed for the extension is delayed, over two million people who have been put on temporary leave could end up losing their jobs. The BOJ, under its governor, Haruhiko Kuroda, who was appointed by Abe, has been supporting the prime minister's Abenomics economic policy mix through massive monetary easing steps. Since March, the BOJ has been supporting corporate financing by providing zero-interest funds to financial institutions. The central bank is expected to maintain its ultraeasy monetary policy for the time being. There are concerns, however, that the relationship between the government and the BOJ could be affected through the appointments of BOJ Policy Board members by the country's next government, a market source said. Abe, who has focused on measures to resuscitate the economy, has given important posts to bureaucrats from the Ministry of Economy, Trade and Industry, such as Takaya Imai, now serving as special adviser to the prime minister, while keeping a distance from the Ministry of Finance, which underlines the need for fiscal reconstruction. Depending on who will be the next prime minister, the MOF may regain its strong influence within the government, pundits said. END