The Cabinet of Prime Minister Yoshihiko Noda on Tuesday approved a a ¥2.5 trillion spending package to finance support measures for carmakers and farmers as well as other policy steps.
The government said it will not issue any new bonds to compile the supplementary budget — the fourth of this fiscal year — as part of its efforts to restore the country’s fiscal health, the worst among major developed economies.
It will instead tap tax revenues and a surplus in funds originally set aside for servicing the existing debt.
The three budgets already implemented for the current fiscal year ending March total more than ¥18 trillion, mainly to finance reconstruction work following the March 11 earthquake and tsunami. The fourth budget will be submitted for Diet deliberations early next year.
It will be the first time since fiscal 1947 that there has been a fourth supplementary budget. That year, the country drew up a total of 15 emergency budgets to rebuild after World War II.
The government has secured ¥300 billion to reinstall an auto subsidy program. The one-year program is aimed at boosting domestic sales of environmentally friendly vehicles in an attempt to support carmakers, which have suffered from the rising yen and the massive flooding in Thailand, which hit their production facilities.
The budget also earmarks ¥740 billion to financially support smaller companies affected by the stronger yen and the Thai disaster, and ¥360 billion in grants to regional governments to support local welfare systems.
Other targets for the emergency budget include measures for agriculture, which could suffer under free-trade accords that the government is working on. This area is to receive ¥160 billion.
The step follows Noda’s recent announcement that Tokyo will seek to join negotiations for the Trans-Pacific Partnership.
Many farmers say that joining the TPP, a multilateral free-trade agreement, would trigger an influx of cheap imports into the country and hurt their livelihoods.