By Kaori Kaneko and Izumi Nakagawa
TOKYO (Reuters) - Japan is expected to compile a stimulus package to boost the economy in the autumn, as its previous two packages were aimed at preventing firms and households from bankruptcy amid the coronavirus pandemic, a close ally of Prime Minister Shinzo Abe said.
Akira Amari, head of the ruling Liberal Democratic Party's tax panel, said in an interview with Reuters on Monday that it was not out of the question that Abe could call a snap election this fall before his term as the premier ends next September.
Support for Abe has fallen due to dissatisfaction with his handling of the pandemic, his attempt to extend top prosecutors' retirement age, an arrest of an ex-justice minister and suspicions of wasteful public spending in programmes to support tourism and small companies.
Amid deepening damage to his popularity, there has been some speculation Abe may call a snap election.
"The government is expected to compile a full-scale economic stimulus package to support growth this fall as the previous two were to protect lives, jobs and firms. In that sense, comprehensive steps to boost the economy are not in place yet," Amari said.
"The chance is not zero that the premier will seek the public mandate with pledging a full-scale economic package this fall."
Abe said last week that he was not at all thinking of calling a snap election but would not hesitate to do so if needed.
The government has compiled two stimulus packages so far totalling $2.2 trillion to ease damage caused by the coronavirus crisis but over half of the respondents to a Reuters survey were critical of the response.
Amari, a former economy minister, played a key role in the premier's "Abenomics" policy, a mix of aggressive fiscal, monetary stimulus and pro-growth steps. He said he would disagree with the idea of cutting Japan's sales tax to help the economy but cash payouts would be more effective.
Asked about Japan's ballooning public debt, which is the highest among advanced economies, Amari said discussions of primary budget balance would be a long way off.