The economy-boosting extra budget being formulated for fiscal 2012 may be worth around ¥12 trillion — including more than ¥4 trillion for public works projects, sources said Monday.
Prime Minister Shinzo Abe’s government is close to cementing the size of the supplementary budget, which would cover the rest of the year ending in March. The ruling bloc, led by his Liberal Democratic Party, won December’s general election by promising huge fiscal spending to fight chronic deflation and address the strong yen.
Government offices were required to submit their requests for the emergency spending plan by Monday. Abe’s Cabinet is expected to approve the draft budget on Jan. 15 before submitting it to the Diet, the sources said.
The government is widely expected to issue new bonds to finance the budget because Finance Minister Taro Aso has said the new administration will not be confined by the annual cap on new debt issuance set by the former administration led by the Democratic Party of Japan.
The LDP-New Komeito ruling bloc will probably earmark ¥4 trillion to ¥5 trillion for public works, including more than ¥100 billion to set up battery-recharging infrastructure for electric vehicles as sought by the Ministry of Economy, Trade and Industry.
METI also asked for more than ¥100 billion to set up programs to facilitate investment by companies struggling from the impact of the strong yen, which has slowed Japan’s exports, or to improve energy efficiency at their facilities to offset any power shortages threatened by the loss of nuclear power resulting from safety concerns created by the Fukushima nuclear disaster.
The public works projects mainly focus on nationwide infrastructure repairs and the construction of quake-resistant roads, bridges and tunnels. Others are designed to speed up reconstruction in the disaster-hit Tohoku region.
Many of those projects are partly financed by local governments, and this time the central government is considering making some ¥2 trillion in grants to regional authorities, the sources said.
The draft budget will also propose about ¥2.6 trillion in contributions from the state to the basic national pension program for the current fiscal year. Excluding that amount, the fresh stimulus spending will total about ¥10 trillion, as sought by the LDP and New Komeito since before the election.
As for other requests from ministries and agencies, METI sought outlays on measures to financially support ventures and other smaller businesses.
The Health, Labor and Welfare Ministry requested ¥210 billion for programs that will encourage companies to employ more workers, especially young people.
Abe to skip Davos
Prime Minister Shinzo Abe will probably not attend the annual meeting of the World Economic Forum in the Swiss resort of Davos later this month, Chief Cabinet Secretary Yoshihide Suga said Monday.
“It is difficult (for Abe) to attend the meeting in consideration of various circumstances,” Suga told reporters. The annual meeting will be held from Jan. 23 to 27.
It is the second year in a row for a prime minister to skip the annual meeting, where country heads and business leaders come together to discuss global issues. Abe’s predecessor, Yoshihiko Noda, did not attend the event last year to concentrate on Diet sessions.