People, wearing protective face masks following an outbreak of the coronavirus disease (COVID-19), are pictured outside Tokyo station in Tokyo, Japan March 9, 2020. REUTERS/Edgard Garrido
TOKYO (Reuters) – Japan will boost its special financing for small and mid-size firms hit by the coronavirus to 1.6 trillion yen ($15.6 billion), according to a government document seen by Reuters on Monday.
The financing, which the government is due to announce on Tuesday, marks a sharp increase from the roughly 500 billion yen previously announced.
The government will use public financial institutions including the Japan Finance Corporation and the Development Bank of Japan to provide the funding, according to the document.
The move comes as the widening coronavirus outbreak has shaken the Japanese economy, which was already on the brink of recession. Finance Minister Taro Aso last week urged public and private financial institutions to step up efforts to ensure smooth corporate financing.
The world’s third-largest economy shrank by an annualized 7.1% in the three months through December, worse than originally thought and the steepest decline since 2014, revised data showed on Monday.
The number of coronavirus cases in Japan has surpassed 1,100, including those from a cruise ship, and claimed 16 lives just as the nation prepares to host the summer Olympic Games in July and August.
As part of the measures, some 500 billion yen will be earmarked for smaller companies, including those whose sales have been hit by the outbreak. That is on top of the 500 billion previously announced.
Other measures include around 200 billion yen of financing from the Development Bank of Japan and the Shoko Chukin Bank for companies, including larger ones, as a crisis response, according to the document.
Reuters previously reported that the Bank of Japan may take steps this month to ensure that companies hit by the coronavirus outbreak do not face a financial squeeze before the end of the current fiscal year in March.
Reporting by Takaya Yamaguchi and Takashi Umekawa; Editing by David Dolan and Jacqueline Wong