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Japan's Diet set to enact FY 2012 extra budget for stimulus steps.

TOKYO, Feb. 26 Kyodo


Japan's parliament is expected to enact on Tuesday a 13.1 trillion yen ($140.7 billion) supplementary budget for fiscal 2012 to finance a stimulus package aimed at pulling the economy out of deflationary recession.

The budget, the second-biggest ever of its kind, may be rejected at the plenary session of the House of Councillors, where the ruling bloc led by the Liberal Democratic Party lacks a majority. But it will be enacted later in the day due to the precedence of House of Representatives decisions over those of the upper house under the Constitution.

Earlier Tuesday, at a meeting of the upper house budget committee that Prime Minister Shinzo Abe and his entire Cabinet attended, the extra budget was approved by a majority from the LDP, its coalition partner the New Komeito Party and opposition parties such as the Japan Restoration Party.

The main opposition Democratic Party of Japan, defeated by Abe's LDP at the general election last December, and some other opposition parties opposed approval of the budget, arguing that the stimulus steps crafted by the ruling camp rely heavily on unnecessary public works projects.

The size of the supplementary budget is the biggest since fiscal 2009, when the government of then Prime Minister Taro Aso of the LDP compiled a 14.7 trillion yen extra budget to fund pump-priming measures in the wake of the global financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers Holdings Inc.

The latest economic stimulus package entailing 10.3 trillion yen in central government funds, endorsed by Abe's Cabinet last month, is expected to add around 2 percentage points to Japan's real gross domestic product and create at least 600,000 jobs, according to the government.

To cover the shortfall in revenue needed to pay for the supplementary budget for the year ending March 31, the government plans to sell an additional 7.8 trillion yen in bonds, sparking concern that Japan's fiscal health, already the worst among major developed nations, could deteriorate further.

The more powerful lower house approved the extra budget earlier this month.

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Publication:Japan Policy & Politics
Geographic Code:9JAPA
Date:Mar 4, 2013
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