The Diet on Tuesday gave the nod to a ¥92.61 trillion draft budget for fiscal 2013 aimed at shoring up the economy.
The budget crafted by Prime Minister Shinzo Abe’s administration was approved at a plenary session of the full Lower House later in the day and sent to the Upper House for further deliberations.
Even if the Upper House, in which the ruling camp led by Abe’s Liberal Democratic Party lacks a majority, were to reject the budget, it would still be enacted by May 15 under a provision of the Constitution that gives priority to decisions by the Lower House.
The fiscal year started April 1. Enactment of the budget has been delayed because Abe’s administration was formed only on Dec. 26 following the Dec. 16 general election, setting back the compilation process.
This budget exceeds the previous record of ¥92.41 trillion set in fiscal 2011 by a Democratic Party of Japan administration.
Abe moved to implement an expansionary fiscal policy in hopes of fast-tracking economic recovery, changing course from the DPJ, which had tried to slash public works but instituted extensive spending measures for the general public, such as bigger allowances for families with children.
With 46.3 percent of the budget for this fiscal year to be financed by new bond issuance, Abe will likely need to quickly hammer out a plan for restoring the government’s precarious financial health, already the worst among major developed countries.
Of the budget’s ¥92.61 trillion in expenditures, ¥22.24 trillion will be allocated for national debt-servicing costs, while the remaining ¥70.37 trillion will be used to fund policy spending.
Spending on public works projects, a pillar of Abe’s policies dubbed “Abenomics,” will increase in fiscal 2013 for the first time in four years, up 15.6 percent from the year before to ¥5.29 trillion.
More bailout options
The Cabinet signed off Tuesday on a bill that would allow the government to inject public funds into all types of financial institutions, including insurance and brokerage firms, in times of crisis.
The bill to revise the deposit insurance law was compiled in response to the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in 2008, which severely affected the global financial system.
Based on the lessons learned from the global crisis, the government wants to create a safety net that would allow it to stabilize financial markets as a whole by using public money to support failing financial institutions of all types.