The government will probably delay compiling the fiscal 2013 budget because it looks increasingly likely that Prime Minister Yoshihiko Noda will call a general election in December, officials said Tuesday.
Any delay in compiling the budget could further hinder the already slowing economy.
The Cabinet normally approves a draft initial budget in late December for the next fiscal year, which begins April 1. Government offices are bracing for the possible delay of the budget formation beyond year’s end, the first such development in 19 years.
The Finance Ministry hopes the Diet can pass the fiscal 2013 budget by the end of March, even if political instability ensues from the next Lower House election, which could oust Noda’s Democratic Party of Japan from power. The ministry fears that failure to start executing the new budget in April will further slow economic activity.
Noda is considering dissolving the Lower House by Nov. 22 for a general election possibly on Dec. 16 or 22, sources said Monday.
If the election is held in January, the current administration will draft the new budget in December. But in that case, a future administration under a new ruling party emerging after the election would certainly modify the budget, taking more time to execute it.
Administrations usually submits the draft budget to the Diet in January, aiming to win approval before the previous fiscal year ends in March. For fiscal 1994, when the budget formation was last delayed beyond December, it wasn’t enacted until June.
There have only been three general elections held in December — in 1970, 1973 and 1984 — and in each case budgets were not drawn up within December.