Cabinet OKs 1.81 tril. yen extra budget as part of econ stimulus

TOKYO, Sept. 29 Kyodo -
The Cabinet formally approved on Monday a supplementary budget of about 1.81
trillion yen for the current fiscal year as part of an 11.7 trillion yen
emergency policy package designed to alleviate the negative impact on the
Japanese economy from spikes in energy and raw material prices.
The extra 1,808.1 billion yen in funds includes 351.8 billion yen for projects
intended to ease people's concerns, such as lessening senior citizens' burden
of medical costs, and 729.6 billion yen for disaster prevention measures,
including the conversion of school buildings into earthquake-proof ones,
according to the Finance Ministry.
The extra budget for fiscal 2008 through March next year also includes 188.1
billion yen to promote a low-carbon society and enhance the competitiveness of
domestic farm and fishery industries, 446.9 billion yen to support small
businesses and 91.6 billion yen to aid local governments.
To finance the budget, the government will newly raise 395.0 billion yen
through the issuance of construction bonds. They will basically cover public
works projects, a ministry official said.
The last time the government raised funds by issuing construction bonds in the
middle of a fiscal year was in fiscal 2002. The government will avoid floating
deficit-covering bonds in a bid to maintain fiscal discipline.
The government will also secure 316.0 billion yen from surpluses left in fiscal
2007, and 1,059.9 billion yen by cutting wasteful spending and tapping reserves
for interest payments on Japanese government bonds due to lower-than-expected
interest rate levels.
The official said the government will slash personnel expenses as well as
public relations and recreational outlays.
Later in the day in a House of Representatives' meeting, Finance Minister
Shoichi Nakagawa called on parliamentarians to swiftly pass the supplementary
budget plan.
Nakagawa said in his first policy speech before the Diet that the Japanese
economy is ''on a weak note,'' adding, ''The prospects for the global economy
are growing increasingly uncertain'' due to the convulsions of international
financial markets and soaring energy and food prices.
He went on to say, ''We've put together a comprehensive economic package in
order to ease people's financial burden and anxieties, and strengthen the
Japanese economy.''
While saying that the Finance Ministry has done its best to minimize spending,
it has decided to issue additional construction bonds because ''there was no
other choice,'' Nakagawa said.
Concerning the proposed fixed-sum income and other tax cuts, he only said, ''We
aim to reach a decision as part of our study of this year's tax code
overhaul.''