ID :
176247
Mon, 04/18/2011 - 17:30
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Shortlink :
https://oananews.org//node/176247
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Japan mulls creating fund to manage quake-relief spending
TOKYO, April 18 Kyodo - The government is aiming to establish a temporary fund to help manage the huge reconstruction expenses following the March 11 earthquake and tsunami, government sources said.
The Democratic Party of Japan headed by Prime Minister Naoto Kan showed major opposition parties a modified draft extra budget for fiscal 2011 worth 4.02 trillion yen ($48.5 billion), which would cover the costs during the early stage of rebuilding without new debt issuance, lawmakers said.
The opposition parties, the Liberal Democratic Party and the New Komeito party, deferred their response, however. Kan's Cabinet is expected to agree to the draft on April 28 and submit it to the Diet with an eye to enacting it in early May, the lawmakers said.
Opposition parties control the House of Councillors, but their rejection of the bill in the upper chamber could be overridden by a second vote in the more powerful House of Representatives, where Kan's ruling coalition holds a majority, under the Constitution.
By creating the provisional fund, which would be controlled separately from the nation's general account budget, the government would be able to clarify the use of the accumulated money, the sources said, adding that it could be helpful if the government introduces a higher tax for the purpose of financing reconstruction.
Kan is widely believed to be exploring the possibility of raising some taxes as part of efforts to reassure capital markets that Tokyo will only issue new debt when it has sufficient funds for redemption.
Not harming market confidence, despite the urgent need for massive pubic spending on relief measures, is a priority issue for the government as Kan has pledged to restore Japan's fiscal health, the worst among developed nations.
DPJ Secretary General Katsuya Okada told a press conference on Monday that the government and ruling bloc would be unable to secure sufficient funds to craft a second or subsequent extra budget only by trimming existing policy spending.
''We will issue restoration bonds,'' Okada said, adding, ''We will manage these separately from conventional government bonds by finding necessary funding sources for redemption.''
He also told reporters that the new bond issuance would be large and the government has little choice but to raise taxes if it is to redeem the additional debt.
Which taxes would be raised will depend on future discussions with opposition parties, Okada said.
Some lawmakers say the government needs two or three emergency budgets and total expenditure on reconstruction in the year through next March could top 10 trillion yen.
During the intra-party talks, Koichiro Gemba, the DPJ's policy chief, continued talks with his counterparts from the LDP and the New Komeito, explaining the draft first extra budget which would finance work to restore roads and other infrastructure, build temporary housing for people affected by the disaster and clear rubble.
The LDP has opposed the government's proposal to divert 2.5 trillion yen, initially earmarked for maintaining the current level of its contributions to the nation's basic pension program, urging Kan instead to give up some spending on his party's benchmark policies, including monthly child allowances.
The Democratic Party of Japan headed by Prime Minister Naoto Kan showed major opposition parties a modified draft extra budget for fiscal 2011 worth 4.02 trillion yen ($48.5 billion), which would cover the costs during the early stage of rebuilding without new debt issuance, lawmakers said.
The opposition parties, the Liberal Democratic Party and the New Komeito party, deferred their response, however. Kan's Cabinet is expected to agree to the draft on April 28 and submit it to the Diet with an eye to enacting it in early May, the lawmakers said.
Opposition parties control the House of Councillors, but their rejection of the bill in the upper chamber could be overridden by a second vote in the more powerful House of Representatives, where Kan's ruling coalition holds a majority, under the Constitution.
By creating the provisional fund, which would be controlled separately from the nation's general account budget, the government would be able to clarify the use of the accumulated money, the sources said, adding that it could be helpful if the government introduces a higher tax for the purpose of financing reconstruction.
Kan is widely believed to be exploring the possibility of raising some taxes as part of efforts to reassure capital markets that Tokyo will only issue new debt when it has sufficient funds for redemption.
Not harming market confidence, despite the urgent need for massive pubic spending on relief measures, is a priority issue for the government as Kan has pledged to restore Japan's fiscal health, the worst among developed nations.
DPJ Secretary General Katsuya Okada told a press conference on Monday that the government and ruling bloc would be unable to secure sufficient funds to craft a second or subsequent extra budget only by trimming existing policy spending.
''We will issue restoration bonds,'' Okada said, adding, ''We will manage these separately from conventional government bonds by finding necessary funding sources for redemption.''
He also told reporters that the new bond issuance would be large and the government has little choice but to raise taxes if it is to redeem the additional debt.
Which taxes would be raised will depend on future discussions with opposition parties, Okada said.
Some lawmakers say the government needs two or three emergency budgets and total expenditure on reconstruction in the year through next March could top 10 trillion yen.
During the intra-party talks, Koichiro Gemba, the DPJ's policy chief, continued talks with his counterparts from the LDP and the New Komeito, explaining the draft first extra budget which would finance work to restore roads and other infrastructure, build temporary housing for people affected by the disaster and clear rubble.
The LDP has opposed the government's proposal to divert 2.5 trillion yen, initially earmarked for maintaining the current level of its contributions to the nation's basic pension program, urging Kan instead to give up some spending on his party's benchmark policies, including monthly child allowances.
