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Factbox-What does Japan’s record $490 billion stimulus package look like?

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Factbox-What does Japan's record $490 billion stimulus package look like?
© Reuters. FILE PHOTO: A man stands in front of the headquarters of Bank of Japan in Tokyo, Japan, May 22, 2020. REUTERS/Kim Kyung-Hoon/File Photo

(Reuters) – Japan is set to compile on Friday a record $490 billion spending package to cushion the economic blow from the COVID-19 pandemic, bucking a global trend towards withdrawing crisis-mode stimulus measures and adding strains to its already tattered finances.

The 56 trillion yen ($490 billion) package, the first to be compiled by Prime Minister Fumio Kishida, will reflect the premier’s focus on distributing more wealth to households. The government will announce details later on Friday.

Below is the gist based on a draft obtained by Reuters and domestic media reports:

KEY COMPONENTS AND FUNDING

* The package will consist of four pillars: 22.1 trillion yen to ramp up hospital beds and medical supplies, 9.2 trillion yen for vaccine development and other steps to prepare for the next wave of pandemic, 19.8 trillion yen for cash payouts to households and subsidy to boost domestic chip production, and 4.6 trillion yen for public works and disaster-relief projects.

* Of the expected 55.7 trillion yen in total spending, 31.9 trillion yen will be funded by an extra budget to be submitted to parliament this year. The rest will be booked in next year’s state budget.

* Aside from debt issuance, the government will tap 4.5 trillion yen left over in reserves for emergency pandemic spending.

COVID-19 COUNTERMEASURES

* The government will pay up to 2.5 million yen each to smaller firms that saw sales slump from the pandemic, and extend until next March financial support via state-backed loans.

* Families with children aged 18 or below will receive cash and consumption coupon payouts totalling 100,000 yen per child under a scheme that sets an annual income cap of 9.6 million yen. This will cost the government roughly 2 trillion yen.

* Japan will resume a discount campaign promoting domestic tourism as early as in January to help hotels and airlines hit by the pandemic.

OTHER SPENDING

* The government will subsidise oil refiners in hope of capping wholesale gasoline and fuel prices to cushion the blow to households and firms from rising oil costs.

* Japan plans to allocate a record 770 billion yen for defence in the extra budget amid concern over China’s military in the disputed East China Sea.

GROWTH STRATEGY

* The government will create a 10 trillion yen fund for universities to spend on technological and scientific research.

* It will set aside 500 trillion yen in subsidies and craft legislation to build domestic chip factories and strengthen supply chains. It also aims to spur private investment into storage battery production.

* It will pledge to beef up tax breaks to spur companies to raise worker pay, and raise state-set wages for nurses, medical care workers and nursing home staff.

* Japan will set up a green innovation fund and pursue regulatory reform to achieve carbon neutrality in 2050.

* It will subsidise purchases of electric vehicles and pledge to have them account for all new cars sold in 2035. It will also promote development of infrastructure such as electric and hydrogen charging points.

* The government will strive to realise “digital” cities in which technology will make working arrangements more flexible, and develop local 5G networks, data centres and drone delivery networks.

($1 = 114.2500 yen)

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Economy

Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling

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oil Russia ban

Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.

“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.

According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.

In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.

Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.

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Economy

EU talks on restrictions on Russian crude oil prices today stalled

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russian crude oil price today

Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.

Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.

“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.

Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.

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Economy

More than 50% of Germans said they had given up shopping for new clothes and electronics. Is Germany’s economy failing?

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is germany's economy failing

Die Welt newspaper cited a survey by the consulting company EY and said that about 56% of Germans who took part in the survey said that they had practically refused to buy new clothes.

Also, 56% of German consumers reported that they now refrain from buying televisions, smartphones, laptops and game consoles. Also, nearly one in two now uses less gasoline, and one in four said they are saving on medications.

What caused the economic crisis in Germany? The main reason is the war in Ukraine and the resulting sanctions by the EU. Also, every second respondent reported that at the moment he could buy only the essentials. According to EY analysts, German households plan to further reduce spending in the coming months. In particular, they plan to save money on food delivery and entertainment.

Earlier, we reported that prices for liquefied natural gas in Asia reached their highest since October.

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