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Tuesday, Jan. 20, 2009

Diet gets biggest budget ever

Staff writer

The government on Monday submitted to the Diet an ¥88 trillion budget for fiscal 2009 — the biggest initial budget in history — to stimulate the sagging economy.

News photo
On a budget: Prime Minister Taro Aso addresses the Upper House Budget Committee on Monday about the second extra budget for fiscal 2008. KYODO PHOTO

The government and Liberal Democratic Party-New Komeito ruling bloc hope to proceed with Diet deliberations on the budget as soon as possible.

The opposition parties, however, have been arguing the Diet should wait until after the second extra budget for fiscal 2008, currently under deliberation in the Upper House, is dealt with.

With the major increase in government spending due to the rapidly declining economy, the fiscal 2009 budget is 6.6 percent higher than the initial budget for fiscal 2008. But due to falling tax revenues, ¥33.3 trillion in new government bonds must be issued, of which ¥25.7 trillion would be deficit-covering bonds.

In 2006, the government of Prime Minister Junichiro Koizumi set a goal of reaching a primary balance surplus by fiscal 2011. That plan appears to be on hold because the government still has to depend on debts to cover its expenditures.

While Prime Minister Taro Aso stressed that the large budget is to prioritize economic measures under the current situation, pundits were quick to note that strategy will steer Japan away from fiscal reconstruction.

During a news conference in the morning, Chief Cabinet Secretary argued that the government is looking at fiscal reconstruction over the long term.

"The government has no choice but to prioritize economic measures under the current situation," Kawamura said. "But that does not mean we have given up on fiscal reconstruction, and after that, economic growth. . . . Looking at things mid- to long-term, we must also consider fiscal reconstruction."

The general expenditures necessary for the government to achieve its policies amount to ¥51.7 trillion, exceeding ¥50 trillion for the first time. The proposed outlays reflect a 9.4 percent jump from the fiscal 2008 budget — the key factor being an additional ¥2.3 trillion needed to cover the increased government financial burden for the basic pension program from one-third to half of the total amount.

Deliberations on the second supplementary budget for fiscal 2008, which includes a controversial ¥2 trillion cash handout, began Monday in the opposition-controlled Upper House.

The extra budget and related bills are likely to be voted down there but later prevail in an overriding vote in the Lower House, which approved the legislation last week.

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The Japan Times

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