Japan to spend over US$137bil as virus hits economy, BOJ eyes more stimulus

Japanese Prime Minister Shinzo Abe addressing Parliament in Tokyo on March 23, 2020. A decision to postpone the 2020 Olympics "may become inevitable" and Abe has pledged a bigger stimulus package to cushion the economic blow from the Covid-19 (coronavirus) outbreak. - AFP

TOKYO: Japanese Prime Minister Shinzo Abe's pledge of "huge" stimulus will involve spending of at least US$137bil financed in part by deficit-covering bonds, sources say on Monday (March 23), joining global efforts to cushion the economic blow from the Covid-19 (coronavirus) pandemic.

While the amount of debt issuance is likely be modest, it will put considerable market focus on Japan's dire fiscal position - at a time the market rout caused by the outbreak is prodding investors to dump even safe-haven assets like government bonds in favour of cash.