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Lower House OKs massive extra budget

Kyodo

The Lower House on Thursday approved a draft ¥13.1 trillion extra budget for fiscal 2012 to finance a huge economic stimulus package aimed at shoring up the recession-hit economy.

The vote, dominated by Prime Minister Shinzo Abe’s Liberal Democratic Party-led coalition, came ahead of Upper House debates that may commence as early as Monday on the supplementary budget for the year through March. It is the second-biggest extra budget on record.

The opposition-controlled Upper House is expected to vote against the extra budget. Nevertheless, it will ultimately be enacted given the precedence of Lower House decisions over those of the Upper House under the Constitution.

The Democratic Party of Japan and other opposition parties that opposed approval of the budget in the Lower House say the stimulus measures crafted by the ruling bloc rely heavily on unnecessary public works projects. Adopting such legislation would ultimately put the country’s fiscal discipline at risk, they argue.

The LDP-New Komeito coalition is seeking to have the budget clear the Diet before Abe heads to the United States for talks with President Barack Obama, lawmakers said. Abe could leave as early as Feb. 21, they said.

The extra budget is the biggest since one worth a record ¥14.7 trillion was approved in fiscal 2009. It includes ¥10.3 trillion to cover the cost of stimulus steps such as public work projects to boost domestic demand at a time when exports have been slowing.

The government will issue new bonds to raise funds for projects such as rebuilding Tohoku region areas struck by the March 2011 disasters and making the country’s infrastructure more disaster-proof.

The DPJ called for a revision to the budget, criticizing the government for growing the national debt by expanding public works spending.

However, Abe has said his administration will reinvigorate growth with flexible fiscal policy and aggressive monetary easing by the Bank of Japan.