The Diet passed a ¥13.1 trillion supplementary budget Tuesday for fiscal 2012 to finance a stimulus package aimed at pulling the economy out of deflationary recession.
The budget, the second-biggest ever of its kind, cleared an Upper House plenary session. The Lower House, where the Liberal Democratic Party-led ruling bloc holds a majority, passed it earlier.
The Democratic Party of Japan, the main opposition force, which was defeated by Abe’s LDP in the general election last December, and other opposition parties were against the budget, arguing the stimulus steps the ruling crafted rely heavily on unnecessary public works projects.
The supplementary budget is the biggest since fiscal 2009, when the government of then-Prime Minister Taro Aso of the LDP compiled a ¥14.7 trillion extra budget to fund pump-priming measures in the wake of the global financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers Holdings Inc.
The latest economic stimulus package, entailing ¥10.3 trillion in central government funds, endorsed by Abe’s Cabinet last month, is expected to add around 2 percentage points to Japan’s real gross domestic product and create at least 600,000 jobs, according to the government.
To cover the shortfall in revenue needed to pay for the extra budget for the year ending March 31, the government plans to sell an additional ¥7.8 trillion in bonds, sparking concern that Japan’s fiscal health, already the worst among major developed nations, could deteriorate further.