Japan cabinet approves $53 billion extra budget to fund stimulus

Thu Dec 12, 2013 5:19am EST
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By Tetsushi Kajimoto

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe's cabinet approved on Thursday a $53 billion extra budget for the current fiscal year to fund stimulus steps announced last week aimed at offsetting the blow from a planned increase in the national sales tax.

The size of the supplementary budget comes to 5.46 trillion yen ($53.3 billion), following a 13.1 trillion yen extra budget compiled in January to stimulate the economy, according to the Ministry of Finance.

The latest budget will bring government spending for fiscal 2013/14, which ends in March, to about 98.1 trillion yen.

That compares with 100.5 trillion yen earmarked the year before, suggesting that Japan's spending remains expansionary. It underlines the need for Abe to strike a balance between boosting near-term growth and reining in a huge public debt.

The focus will now shift to a draft annual budget for the next fiscal year from April, expected to be compiled on December 24.

"Our major objective is to achieve both rebuilding public finances and revitalizing the economy. OECD and G20 countries are moving in this direction," Finance Minister Taro Aso said.

In its basic policy outline for the initial budget, the government vowed on Thursday to do the utmost to keep fresh bond issuance in fiscal 2014/15 below the current year's level.

Abe's government could face stiff resistance against spending cuts, with budget requests from ministries totaling a record 99.3 trillion yen for fiscal 2014/15.   Continued...

Japan's Prime Minister Shinzo Abe speaks during a news conference at his official residence in Tokyo December 9, 2013. REUTERS/Toru Hanai