720 bil. yen from Japan's 'Go To Travel' budget likely to go unused amid COVID surge

TOKYO -- A budget of 720 billion yen (about $6.3 billion) set aside for the Japanese government's "Go To Travel" domestic tourism subsidy campaign is increasingly likely to be returned to state coffers, as surging coronavirus infections in Japan have made the prospect of resuming the program quite uncertain.

The massive funding -- part of the about 1.44 trillion-yen (approx. $12.5 billion) budget allocated in the first supplementary budget and reserve funds for fiscal 2020 -- have been left unused since the Go To Travel initiative was suspended in December 2020. As the Public Finance Act allows budget funds to be carried over only to the following fiscal year, the 720 billion yen must be returned to public coffers after its execution deadline on March 10.

While the government has secured another 830 billion-yen ($7.2 billion) budget to continue the tourism campaign even after refunding the 720 billion yen, there are no prospects for the program to be restarted anytime soon.

Before the coronavirus's omicron variant spread across Japan, the government had planned to use up roughly 460 billion yen ($4 billion) of the 720 billion yen in funds by March 10, on the assumption of restarting the Go To campaign at the end of January 2022.

However, after surging COVID-19 infections made it uncertain if the program could be resumed within fiscal 2021 ending March, the Ministry of Land, Infrastructure, Transport and Tourism conferred with the Ministry of Finance over whether the 720 billion yen in funding could be carried forward once more to fiscal 2022 under an exceptional measure. However, the Finance Ministry rejected the plan, on the grounds that it would run counter to the effect of the Public Finance Act.

In a desperate measure, the tourism ministry has switched the operator of the Go To Travel program from the central government to prefectural governments for a 560 billion-yen ($4.9 billion) portion of the fiscal 2020 third supplementary budget that cannot technically be carried over to fiscal 2022. By distributing the 560 billion yen to prefectural governments within fiscal 2021, the funds can in effect be rolled over to the following fiscal year. Apart from this, roughly 270 billion yen ($2.3 billion) in funds in the fiscal 2021 supplementary budget will also be brought forward to fiscal 2022 to prepare for the resumption of the Go To Travel program moving forward.

(Japanese original by Hajime Nakatsugawa and Takayuki Hakamada, Business News Department)