ID :
36748
Sun, 12/21/2008 - 00:33
Auther :
Shortlink :
https://oananews.org//node/36748
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MOF tables record 88.55 trillion yen budget to buoy economy
TOKYO, Dec. 20 Kyodo - The Finance Ministry on Saturday proposed a state budget for fiscal 2009 reaching an all-time high of 88,548.0 billion yen, which embodies an all-out effort by the government to stave off a negative impact from the sharp downturn in the global economy while temporarily shelving fiscal reconstruction efforts.
The proposed general account budget for the fiscal year starting next April is
up 6.6 percent from the initial fiscal 2008 budget, posting the third fastest
increase on record. It surpasses in size the previous largest budget of
84,987.1 billion yen in fiscal 2000.
The ministry's draft fiscal 2009 budget will go through fine-tuning from
Saturday and the allocation of a total of 353.0 billion yen in outlays
earmarked for priority areas and yet-to-be decided expenditures will be
finalized by Wednesday.
Prime Minister Taro Aso will determine priority areas, which will center on
emergency economic measures such as job security in rural areas, Chief Cabinet
Secretary Takeo Kawamura told reporters.
The Aso Cabinet is scheduled to adopt the final draft budget on Wednesday,
which will be submitted to an ordinary Diet session in January.
Aso plans to implement it and two extra budgets worth 6.6 trillion yen in total
for fiscal 2008 ''seamlessly'' to shield the nation's economy from the
downturn.
Finance Minister Shoichi Nakagawa emphasized at a news conference that the
government had to turn away from fiscal rehabilitation principles to fight
against the economic crisis, saying it was the kind that happens ''only once in
100 years.''
''This year's budget compilation is historically tough,'' the minister said.
''I did not expect the economy to deteriorate so quickly toward the end of the
year.''
He expressed hope that the budget will cushion the nation against repercussions
from the global economic downturn triggered by the financial crisis and put its
economy on a recovery track.
The fiscal 2009 budget features 1 trillion yen in special emergency reserves to
cope with any further deterioration of the economy.
To demonstrate that the government has not yet abandoned its efforts to turn
around Japan's fiscal situation, which remains the worst among developed
countries, the ministry tried to rein in the new bond issuance by tapping
reserves in special account budgets.
Those reserves, often dubbed by critics ''buried money'' since information on
them has not been fully disclosed, came under the spotlight in this year's
budget compilation process as the government desperately looked for financial
resources to save new debt issuance.
Nakagawa said the government dared to take an ''extraordinary and unusual
step'' to secure revenues in the fiscal 2009 budget. Kawamura said the budget
points to the need to hike the consumption tax in three years after the
economic recovery, as sought by Aso.
A boost in the sales tax from the current 5 percent is deemed necessary in the
future to secure stable financial resources to cover swelling social security
costs in rapidly aging Japan.
Non-tax revenues for the fiscal 2009 budget will reach 9,151.0 billion yen,
more than double the 4,159.3 billion yen in the initial fiscal 2008 budget, as
increased use of the special account reserves has pushed up the figure.
For example, the government will secure 4,235.0 billion yen from reserves
originally intended to prepare for wild fluctuations in interest rates on
national bonds, and 2.4 trillion yen from foreign exchange reserves.
Despite such efforts, the new government bond issuance in fiscal 2009 will
reach 33,294.0 billion yen, up sharply from 25,348.0 billion yen under the
initial fiscal 2008 budget, to respond to a sharp decline in tax revenues amid
the economic slump.
Tax revenues in fiscal 2009 are expected to sink 13.9 percent from the current
fiscal year to 46,103.0 billion yen, with plunges in corporate tax revenues.
The pace of fall was the second fastest since 19.5 percent in fiscal 1999.
The fresh bond issuance will top the 30 trillion yen mark for the first time in
four years on an initial budget basis. Former Prime Minister Junichiro Koizumi,
who served between 2001 and 2006, set the goal of keeping new government bond
issuance below 30 trillion yen to maintain fiscal discipline.
Funds raised by the bond issuance will cover 37.6 percent of total revenues in
the next business year, with the ratio rising rapidly from 30.5 percent in
fiscal 2008.
The nation's deficit in the primary balance -- annual tax revenues and non-tax
revenues minus outlays other than debt-servicing costs -- is expected to swell
to around 13 trillion yen from about 5.2 trillion yen in the initial fiscal
2008 budget.
The government has not yet ditched its goal of achieving a primary balance
surplus in fiscal 2011, but increased fiscal spending to tackle the downturn
has made it difficult without a step to boost revenues, such as the consumption
tax hike.
The draft budget allocates a record high of 51,731.0 billion yen in general
expenditures -- core policy-related outlays -- for fiscal 2009, up 9.4 percent
from the initial fiscal 2008 budget. It marked the fastest increase over the
past 20 years.
In addition to the 1 trillion yen special reserves, the budget sets aside
2,300.2 billion yen from state coffers to raise the government's contribution
to the nation's basic pension program from the current one-third to one-half
from April. Such outlays inflate the general expenditures.
Reflecting Aso's call to boost support for local governments, whose financial
position has been squeezed by the plummeting corporate tax revenues, the budget
allocates 16,573.3 billion yen in tax grants to municipalities, up 6.1 percent.
The budget shows the government's efforts to observe an earlier set policy of
curbing natural increase in social security costs by 220.0 billion yen annually
have almost failed.
It stipulates the government will only slash 23.0 billion yen in medical costs
by promoting low-priced generic drugs. For the remaining amount, the government
will be exempt from cutting welfare costs as it has raked in stopgap financial
resources.
The government has committed itself to cutting other expenses such as public
works spending and foreign aid every year. In the ministry's draft, public
works costs will be effectively slashed by 5.9 percent from the previous year
and grants and technical aid will also slightly fall.
The ministry's plan also shows the government's fiscal investment and loan
program in the next fiscal year will grow 14.4 percent to 15,863.2 billion yen,
posting the first increase in 10 years. The boost is partly intended to help
support fundraising by cash-strapped firms.
==Kyodo
The proposed general account budget for the fiscal year starting next April is
up 6.6 percent from the initial fiscal 2008 budget, posting the third fastest
increase on record. It surpasses in size the previous largest budget of
84,987.1 billion yen in fiscal 2000.
The ministry's draft fiscal 2009 budget will go through fine-tuning from
Saturday and the allocation of a total of 353.0 billion yen in outlays
earmarked for priority areas and yet-to-be decided expenditures will be
finalized by Wednesday.
Prime Minister Taro Aso will determine priority areas, which will center on
emergency economic measures such as job security in rural areas, Chief Cabinet
Secretary Takeo Kawamura told reporters.
The Aso Cabinet is scheduled to adopt the final draft budget on Wednesday,
which will be submitted to an ordinary Diet session in January.
Aso plans to implement it and two extra budgets worth 6.6 trillion yen in total
for fiscal 2008 ''seamlessly'' to shield the nation's economy from the
downturn.
Finance Minister Shoichi Nakagawa emphasized at a news conference that the
government had to turn away from fiscal rehabilitation principles to fight
against the economic crisis, saying it was the kind that happens ''only once in
100 years.''
''This year's budget compilation is historically tough,'' the minister said.
''I did not expect the economy to deteriorate so quickly toward the end of the
year.''
He expressed hope that the budget will cushion the nation against repercussions
from the global economic downturn triggered by the financial crisis and put its
economy on a recovery track.
The fiscal 2009 budget features 1 trillion yen in special emergency reserves to
cope with any further deterioration of the economy.
To demonstrate that the government has not yet abandoned its efforts to turn
around Japan's fiscal situation, which remains the worst among developed
countries, the ministry tried to rein in the new bond issuance by tapping
reserves in special account budgets.
Those reserves, often dubbed by critics ''buried money'' since information on
them has not been fully disclosed, came under the spotlight in this year's
budget compilation process as the government desperately looked for financial
resources to save new debt issuance.
Nakagawa said the government dared to take an ''extraordinary and unusual
step'' to secure revenues in the fiscal 2009 budget. Kawamura said the budget
points to the need to hike the consumption tax in three years after the
economic recovery, as sought by Aso.
A boost in the sales tax from the current 5 percent is deemed necessary in the
future to secure stable financial resources to cover swelling social security
costs in rapidly aging Japan.
Non-tax revenues for the fiscal 2009 budget will reach 9,151.0 billion yen,
more than double the 4,159.3 billion yen in the initial fiscal 2008 budget, as
increased use of the special account reserves has pushed up the figure.
For example, the government will secure 4,235.0 billion yen from reserves
originally intended to prepare for wild fluctuations in interest rates on
national bonds, and 2.4 trillion yen from foreign exchange reserves.
Despite such efforts, the new government bond issuance in fiscal 2009 will
reach 33,294.0 billion yen, up sharply from 25,348.0 billion yen under the
initial fiscal 2008 budget, to respond to a sharp decline in tax revenues amid
the economic slump.
Tax revenues in fiscal 2009 are expected to sink 13.9 percent from the current
fiscal year to 46,103.0 billion yen, with plunges in corporate tax revenues.
The pace of fall was the second fastest since 19.5 percent in fiscal 1999.
The fresh bond issuance will top the 30 trillion yen mark for the first time in
four years on an initial budget basis. Former Prime Minister Junichiro Koizumi,
who served between 2001 and 2006, set the goal of keeping new government bond
issuance below 30 trillion yen to maintain fiscal discipline.
Funds raised by the bond issuance will cover 37.6 percent of total revenues in
the next business year, with the ratio rising rapidly from 30.5 percent in
fiscal 2008.
The nation's deficit in the primary balance -- annual tax revenues and non-tax
revenues minus outlays other than debt-servicing costs -- is expected to swell
to around 13 trillion yen from about 5.2 trillion yen in the initial fiscal
2008 budget.
The government has not yet ditched its goal of achieving a primary balance
surplus in fiscal 2011, but increased fiscal spending to tackle the downturn
has made it difficult without a step to boost revenues, such as the consumption
tax hike.
The draft budget allocates a record high of 51,731.0 billion yen in general
expenditures -- core policy-related outlays -- for fiscal 2009, up 9.4 percent
from the initial fiscal 2008 budget. It marked the fastest increase over the
past 20 years.
In addition to the 1 trillion yen special reserves, the budget sets aside
2,300.2 billion yen from state coffers to raise the government's contribution
to the nation's basic pension program from the current one-third to one-half
from April. Such outlays inflate the general expenditures.
Reflecting Aso's call to boost support for local governments, whose financial
position has been squeezed by the plummeting corporate tax revenues, the budget
allocates 16,573.3 billion yen in tax grants to municipalities, up 6.1 percent.
The budget shows the government's efforts to observe an earlier set policy of
curbing natural increase in social security costs by 220.0 billion yen annually
have almost failed.
It stipulates the government will only slash 23.0 billion yen in medical costs
by promoting low-priced generic drugs. For the remaining amount, the government
will be exempt from cutting welfare costs as it has raked in stopgap financial
resources.
The government has committed itself to cutting other expenses such as public
works spending and foreign aid every year. In the ministry's draft, public
works costs will be effectively slashed by 5.9 percent from the previous year
and grants and technical aid will also slightly fall.
The ministry's plan also shows the government's fiscal investment and loan
program in the next fiscal year will grow 14.4 percent to 15,863.2 billion yen,
posting the first increase in 10 years. The boost is partly intended to help
support fundraising by cash-strapped firms.
==Kyodo
