ID :
177315
Fri, 04/22/2011 - 18:15
Auther :
Shortlink :
https://oananews.org//node/177315
The shortlink copeid
Cabinet approves 4 tril. yen extra budget after quake
TOKYO (Kyodo) - The Cabinet of Prime Minister Naoto Kan adopted Friday a draft extra budget of 4.02 trillion yen (some $50 billion) for fiscal 2011, struggling to secure funds for the early phase of reconstruction after the March 11 earthquake and tsunami, which will require further emergency spending.
Kan is shifting his focus to drawing up a second supplementary budget for the year, which began this month, that could possibly amount to more than 10 trillion yen and will force the government to issue new debt to finance it, despite scrutiny over Japan's fiscal health, government officials said.
To deal with the worst postwar crisis in the country, the first extra budget is already bigger than the three special budgets implemented after the 1995 Kobe quake totaling 3.23 trillion yen. But the government is not planning to issue any new bonds for the first budget, instead diverting funds from the initial fiscal 2011 outlays.
''We would like to tackle restoration work while the Cabinet is well united under the belief that this is a new start,'' Kan told his ministers, referring to the budget which the government aims to enact on May 2 after a week of Diet deliberations, the officials said.
The extra budget would cover the costs of restoration work such as clearing rubble in the affected Tohoku region of northeastern Japan and building temporary housing for victims of the disaster.
The biggest portion of it, about 1.20 trillion yen, would finance public works projects, such as the repair of roads, ports and farmland. While 362.6 billion yen is earmarked for temporary home building, 351.9 billion yen would be spent on clearing rubble left by the magnitude-9.0 temblor and ensuing tsunamis.
The government has also set aside 48.5 billion yen to cover payments of 5 million yen to each household that lost its breadwinner due to the disaster, while funneling 510.0 billion yen to financially support smaller businesses in the devastated areas.
Given the serious electricity supply shortages after the quake, which has crippled some nuclear and thermal power stations in disaster areas, it eyes spending 10.0 billion yen to encourage more companies to introduce private power generation systems.
Japan will forgo new debt issuance to create the first special budget for the year as Kan has pledged to restore the nation's fiscal health, the worst among major developed countries, with the gross public-sector debt approaching 200 percent of gross domestic product.
The government, led by Kan's Democratic Party of Japan, has instead secured over 92 percent of funding sources by shelving or giving up the outlays it determined earlier, including for the ruling party's benchmark policies.
It has decided to divert some 2.50 trillion yen initially earmarked for keeping the current level of its contributions to the country's basic pension program, while claiming it would maintain the quality of services under the program.
Japan will also reduce its foreign aid, cutting the budget for official development assistance by 50.1 billion yen from the initially allocated 572.7 billion yen. It will mainly slash yen loans and contributions to multilateral funds.
The DPJ has shelved a plan to upgrade its key policy of monthly child allowances, which would have cost 208.3 billion yen.
Kan is now believed to have shifted his focus to creating a second emergency budget, possibly in the summer. It could be bigger than the first and force the government to issue deficit-covering bonds to finance it at a time when financial markets are scrutinizing the fiscal sustainability of the world's third-biggest economy.
Losing market confidence in Japan's resolve for fiscal rehabilitation means the government will suffer from rising long-term interest rates, which bring additional burdens in servicing existing debt.
Some hurdles remain for the envisaged second extra budget, however, as Kan's ruling coalition has failed to win Diet approval of legislation that would enable the government to issue new deficit-financing bonds in fiscal 2011, with opposition parties controlling the House of Councillors.
Kan is shifting his focus to drawing up a second supplementary budget for the year, which began this month, that could possibly amount to more than 10 trillion yen and will force the government to issue new debt to finance it, despite scrutiny over Japan's fiscal health, government officials said.
To deal with the worst postwar crisis in the country, the first extra budget is already bigger than the three special budgets implemented after the 1995 Kobe quake totaling 3.23 trillion yen. But the government is not planning to issue any new bonds for the first budget, instead diverting funds from the initial fiscal 2011 outlays.
''We would like to tackle restoration work while the Cabinet is well united under the belief that this is a new start,'' Kan told his ministers, referring to the budget which the government aims to enact on May 2 after a week of Diet deliberations, the officials said.
The extra budget would cover the costs of restoration work such as clearing rubble in the affected Tohoku region of northeastern Japan and building temporary housing for victims of the disaster.
The biggest portion of it, about 1.20 trillion yen, would finance public works projects, such as the repair of roads, ports and farmland. While 362.6 billion yen is earmarked for temporary home building, 351.9 billion yen would be spent on clearing rubble left by the magnitude-9.0 temblor and ensuing tsunamis.
The government has also set aside 48.5 billion yen to cover payments of 5 million yen to each household that lost its breadwinner due to the disaster, while funneling 510.0 billion yen to financially support smaller businesses in the devastated areas.
Given the serious electricity supply shortages after the quake, which has crippled some nuclear and thermal power stations in disaster areas, it eyes spending 10.0 billion yen to encourage more companies to introduce private power generation systems.
Japan will forgo new debt issuance to create the first special budget for the year as Kan has pledged to restore the nation's fiscal health, the worst among major developed countries, with the gross public-sector debt approaching 200 percent of gross domestic product.
The government, led by Kan's Democratic Party of Japan, has instead secured over 92 percent of funding sources by shelving or giving up the outlays it determined earlier, including for the ruling party's benchmark policies.
It has decided to divert some 2.50 trillion yen initially earmarked for keeping the current level of its contributions to the country's basic pension program, while claiming it would maintain the quality of services under the program.
Japan will also reduce its foreign aid, cutting the budget for official development assistance by 50.1 billion yen from the initially allocated 572.7 billion yen. It will mainly slash yen loans and contributions to multilateral funds.
The DPJ has shelved a plan to upgrade its key policy of monthly child allowances, which would have cost 208.3 billion yen.
Kan is now believed to have shifted his focus to creating a second emergency budget, possibly in the summer. It could be bigger than the first and force the government to issue deficit-covering bonds to finance it at a time when financial markets are scrutinizing the fiscal sustainability of the world's third-biggest economy.
Losing market confidence in Japan's resolve for fiscal rehabilitation means the government will suffer from rising long-term interest rates, which bring additional burdens in servicing existing debt.
Some hurdles remain for the envisaged second extra budget, however, as Kan's ruling coalition has failed to win Diet approval of legislation that would enable the government to issue new deficit-financing bonds in fiscal 2011, with opposition parties controlling the House of Councillors.
