Boost from fiscal support yet to be fully felt

The government has issued ¥95tn in government securities since the start of the current fiscal year in April, equivalent to a huge 17% of pre-virus GDP. It intends to issue another ¥35tn by March 20201. Most of those funds have been issued to fund the transfer payments to households and firms that were included in the supplementary budgets unveiled in April and May. But a sizeable share is parked at the Bank of Japan: The government’s deposit account with the Bank has surged by ¥35tn since the start of the year. That means that more than half of the fiscal spending planned for this year has yet to take place, which should support the recovery in activity over the coming months.