Japan Set to Declare State of Emergency

TOKYO (Reuters) -
A man wearing a protective face mask walks past Eiju General Hospital, Tokyo, Japan, April 6, 2020. (Reuters/Issei Kato)

Japan will declare a state of emergency as early as Tuesday in a bid to stop the coronavirus, media reported, with the government preparing a stimulus package to soften the blow on an economy already struggling to avoid a recession.

More than 3,500 people have tested positive for the coronavirus in Japan and 85 have died, not a huge outbreak compared with some hot spots, but the numbers keep rising with particular alarm over the spread in Tokyo, which has more than 1,000 cases.

Prime Minister Shinzo Abe was likely to announce his plan for the emergency later on Monday, the Yomiuri newspaper reported, while Kyodo news agency said new measures would likely come into force on Wednesday.

An emergency would give governors authority to call on people to stay at home and businesses to close, but not to order the kind of lockdowns seen in other countries. In most cases, there are no penalties for ignoring requests, and enforcement will rely more on peer pressure and respect for authority.

The stimulus package of hundreds of billions of dollars is due to be rolled out this week.

Japanese Prime Minister Shinzo Abe’s government is to pledge to take “all steps” encompassing fiscal, monetary and tax policies to battle the deepening fallout from the coronavirus in a stimulus package to be approved on Tuesday, a draft document reviewed by Reuters showed.

Abe has pledged to craft an “unprecedented” stimulus package to respond to the global downturn inflicted by the pandemic, which would exceed the size of one compiled in the wake of the 2009 financial crisis totalling 56 trillion yen ($514 billion) in size, with fiscal spending of 15 trillion yen.

Neither the size of the coronavirus package nor the amount of fiscal measures has yet been determined, according to the draft prepared by the government. But in a measure of how seriously the government views the situation, the document refers to the pandemic as the “biggest crisis” the global economy has faced since  World War II.

The document says the government and the Bank of Japan need to share a sense of crisis and closely cooperate with each other to tackle the crisis.

The draft package features direct payments to households and financial backstops to companies, highlighting extensive damage from the virus, which has fueled fears of a recession, while the government looks set to declare a state of emergency.

The spending plan includes subsidies for households with children, cash payouts to small and mid-sized firms to help them continue business operations, and arrangements to allow them to borrow at zero interest and without collateral from private financial institutions.

To fund the package, the government would issue deficit-covering bonds, adding further strain to the industrial world’s heaviest public debt at more than twice the size of its $5 trillion economy.