Exclusive: Japan to keep funding tourism campaign under new stimulus package - draft

By Takaya Yamaguchi

TOKYO (Reuters) - Japan plans to keep setting aside money to promote domestic tourism and dining out in its next stimulus package, according to a draft of the government's upcoming package seen by Reuters, even as rising COVID-19 infections have prompted concern about the campaigns.

The draft stimulus package also included a plan to set up a fund to encourage investment in green technology, a nod to Prime Minister Yoshihide Suga's pledge that Japan will aim for net-zero emissions by 2050.

The outline underscores Suga's resolve to keep businesses open, even as Japan faces a resurgence in coronavirus infections that are quickly filling up hospital beds. It also points to the dilemma policymakers face in balancing the need to support the economy without spreading the virus.

The draft made no mention of the size of stimulus package or its source of funding, which will likely be finalised in the coming days.

Some ruling party lawmakers have called for a third extra budget of up to 30 trillion yen ($290 billion) to fund the new package, which Suga instructed his cabinet to compile.

The stimulus plan would follow a combined $2.2 trillion in two previous packages rolled out this year to cushion the economic blow from the pandemic.

While the previous packages responded to the immediate hit from the pandemic, the upcoming stimulus is seen focusing more on efforts to cope with the 'new normal' in the post-COVID era.

The new package will include subsidies for municipal governments that compensate businesses meeting requests to close shops early to contain the pandemic, the draft showed.

The government will also aid research and development in programmes that help achieve a carbon neutral society, according to the draft.

Japan has confirmed around 150,000 cases of virus infections with deaths at more than 2,100.

Japan's economy has been gradually recovering from its worst postwar slump caused by the coronavirus earlier this year. But it is likely to take years before the economy returns to pre-pandemic levels.

($1 = 104.2600 yen)

(Reporting by Takaya Yamaguchi; writing by Tetsushi Kajimoto and Leika Kihara; editing by Louise Heavens and Raju Gopalakrishnan)