TOKYO • Japan’s ruling party proposed the country’s biggest-ever stimulus package worth ¥60 trillion (RM2.39 trillion) as the spreading coronavirus locks the economy in a recession.

The sum includes ¥20 trillion in fiscal measures with private initiatives and other elements likely making up the rest, according to the proposal by the Liberal Democratic Party yesterday. More than ¥10 trillion, or the equivalent of a five percentage point cut in the sales tax rate, would be handed out to the public in a combination of cash, subsidies and coupons, according to the plan.

The proposal puts an initial figure on a stimulus package that Prime Minister Shinzo Abe (picture) promised on Saturday would be bigger than the economic support offered in the wake of the global financial crisis. The plan didn’t include details of how the package would be funded, though the scale of fiscal measures suggests a sharp increase in the budget deficit would be likely.

The main takeaway from the plan is the Abe administration’s signalling of its strong commitment to support the economy, economists said.

The plan already leaves the door open to more stimulus down the line, flagging the need to consider more measures if needed. Past experience shows that one package is unlikely to be enough, with as many as five sets of measures unleashed between August 2008 and December 2009 as Japan battled the fallout of the financial crisis.

Finance Minister Taro Aso has already called for a two-stage response to the impact of the pandemic. Kishida said on Monday that a series of packages could eventually amount to ¥100 trillion.

The latest package would be equivalent to more than 10% of the nation’s GDP and calls for corporate funding measures worth more than ¥40 trillion, according to the plan. It also says the party tax panel will consider tax payment deferrals and cuts.

The plan said cash handouts would be made periodically for households and individuals whose incomes have been greatly hit by the virus. It also called for increased subsidies to companies that don’t cut jobs. — Bloomberg