MOF Panel Warns of Coronavirus Measures Impeding Growth

Politics

Tokyo, Nov. 25 (Jiji Press)--A Japanese Ministry of Finance panel on Wednesday warned of the risk of the government's massive business support measures aimed at helping cushion the impacts of the novel coronavirus crisis leading recipient firms to weaken their own efforts and impeding their growth.

In a set of proposals related to the compilation of the government's fiscal 2021 budget, submitted to Minister of Finance Taro Aso, the Fiscal System Council said that the extensive measures "may cause 'moral hazard' among firms receiving the support and hinder growth if the steps are kept in place for an extended period of time."

The government should shift its corporate aid focus to measures for helping companies adapt to changes in the economic structure and strengthen their growth potential, with an eye on an era after the end of the pandemic, the council said.

The government's coronavirus relief measures include a financial benefit program for small companies hit hard by the crisis and the special measure of raising the cap on the amount of aid under its employment adjustment subsidy scheme. Saying that they are "emergency steps," the council sought a review of the measures so that they will not impede companies' reform efforts.

Specifically, the council called on the government to end the benefit program for small businesses in January next year as planned and instead focus on support for firms that are taking constructive moves, such as converting to new businesses. The special measure under the employment adjustment subsidy program should be terminated in stages as early as possible, it said.

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