TOKYO- Japan will eventually need to create new schemes to recapitalize banks and allow companies to restructure their debt smoothly as part of efforts to cushion the economic blow from the COVID-19 pandemic, a senior ruling party official said on Monday.
Debate on creating such schemes may kick off next year, when there is more clarity on how firms and households behave in a post-pandemic era, said Seiji Kihara, who is deputy chair of the ruling Liberal Democratic Party’s (LDP) policy research council.
For now, the government’s focus should be to keep pumping money to firms affected by the pandemic and offer immediate relief for households hit hardest by the health crisis, he added.
“At some point in the future, Japan will need new schemes so we must consider what more the government can do for financial institutions and companies,” Kihara told Reuters.
Japan is due to host the Olympic Games in July but is grappling with a fourth wave of coronavirus infections and a slow vaccination rollout. Curbs on economic activity to prevent the spread of the virus have prolonged the pain on Japanese retailers, airlines and the tourism sector, forcing some to seek funding from state-backed lenders.
