Good news! The government won’t run out of money until the end of November — about a month later than expected — thanks to efforts to delay spending, sources said.
The fiscal 2012 general account budget was worth about ¥90 trillion, but about ¥38 trillion of that was to be borrowed in the form of deficit-covering bonds. Since the chances of passing the bill needed to authorize the bond issuance looks impossible before the Diet’s last session Saturday, the government has decided put off some spending while the political showdown continues.
On Friday, the Cabinet decided to defer just over ¥4 trillion in spending in the form of local grants that were to be allocated in September. About ¥2.1 trillion of it was destined for prefectural governments, but that will be reduced to about ¥700 billion, with the remaining ¥1.4 trillion to be allocated in October and later, the sources said.
If the prefectural and local governments have to take out loans to cover resulting budget shortages, the state will shoulder their interest payments, the sources said.
The Diet is expected to hold an extraordinary session in autumn and if the bond bill fails to emerge, the central government could be forced to postpone spending even further to avert a crisis, the sources said.