Visitors, including from abroad, stroll at Nakamise street leading to Senso-ji temple, at Asakusa district, a popular sightseeing spot in Tokyo, Japan, October 19, 2022. REUTERS/Issei Kato
TOKYO -Japan is aiming to earn 5 trillion yen ($34 billion) or more from tourists over the next financial year, a draft economic package seen by Reuters showed on Tuesday, as policymakers hope to use the weak yen to attract foreign visitors.
Japan has eased COVID-19 border control requirements this month, a key step in fostering a recovery in the country’s tourism sector, which is eager to take advantage of the yen’s slide to a 32-year low.
Japanese policymakers have remained coy about the likely size of the planned stimulus package, although some lawmakers have floated ball-park figures of 30 trillion yen or more.
Japan must strike a delicate balance between spending its way out of the COVID-induced doldrums in the near term while reining in the industrial world’s heaviest public debt at more than twice the size of the economy in the long run.
Investors will scrutinise the size of the package and government debt to finance it, particularly after Britain was plunged into financial crisis by the market reaction to plans for huge tax cuts funded by borrowing.
The package will be compiled by the end of this month. The government will also devise a new plan by the end of the current fiscal year in March to promote Japan as a tourist destination, according to the draft.
Japan spent 2.8 trillion yen in dollar-selling, yen-buying intervention last month when authorities acted in the markets to prop up the yen for the first time since 1998 and ease the pain of rising import costs.
The economic package is made up of four pillars: Response to price hikes and accelerating wage rises; enhancing purchasing power; promoting Prime Minister Fumio Kishida’s new capitalism; and securing relief and safety of the people.
It marks a second round of economic measures following the first package backed by a 2.7 trillion yen extra budget. Kishida’s government is expected to compile a second extra budget, with the aim of winning parliament’s approval by December.
The first measures, which took effect in May, were comprised of steps to help households and small firms deal with surging fuel prices.
Any heavy spending could make it even harder to bring Japan’s primary budget balance, excluding new bond sales and debt-servicing, into the black in the fiscal year ending March 2026.
($1 = 149.0000 yen)