Japan Contemplates Extra Budget of ¥1-2 Trillion to Boost Economy

The Japanese government is considering adding a fourth extra budget of ¥1-2 trillion (US$13-26 billion) for the current fiscal year as a means to fund additional economic steps without issuing new bonds, said the Yomiuri newspaper, as cited by Reuters, on Wednesday.

According to Yomiuri, the Japanese government will commence work on the budget in November, with the budget expected to last till the end of the fiscal year in March 2012.

The Japanese government is considering adding a fourth extra budget of ¥1-2 trillion (US$13-26 billion) for the current fiscal year as a means to fund additional economic steps without issuing new bonds, said the Yomiuri newspaper, as cited by Reuters, on Wednesday.

According to Yomiuri, the Japanese government will commence work on the budget in November, with the budget expected to last till the end of the fiscal year in March 2012.

The budget will also include funding for rebuilding following a recent storm that hit western Japan, and will be funded with the surplus cash that was set aside for bond interest payments, which turned out to be lower than expected.

The news came a day after Japanese Prime Minister Yoshihiko Noda gave his first major policy speech to the House of Representatives in Tokyo, where he vowed to devise a plan to reinvigorate the nation’s sluggish economy and enhance restoration efforts in the wake of the March disasters.

[quote]”While overcoming the twin crises of the ‘Great East Japan Earthquake’ and the global economic crisis, we must invest in this country’s future so people are filled with hope and each and every citizen can be proud and feel, ‘I am glad I was born in this country’,” said the prime minister, as quoted by Xinhua News.[/quote]

Noda added that he hoped both Democratic Party of Japan (DPJ) and Liberal Democratic Party (LDP) politicians could put aside their differences so that the necessary bills for reconstruction funds, social security and tax could be swiftly passed through a divided parliament.

The Japanese government is currently working on a third extra budget, expected to be worth more than ¥10 trillion, that it aims to submit to parliament by October.

However, Noda has also pledged to first carry out spending cuts in order to fund the extra budget.

[quote]”Japan’s credibility is on the verge of being severely damaged due to industry hollowing out and deteriorating fiscal conditions, ” Noda said.[/quote]

“We cannot carry on forever with a kind of fiscal management where debt keeps piling up in a snowball effect,” said the prime minister about the country’s public debt, which is nearly twice the size of its US$5 trillion economy.