Prime Minister Shinzo Abe’s Cabinet on Thursday approved a ¥5.5 trillion supplementary budget for fiscal 2013 to fund a stimulus package designed to minimize the negative impact of next spring’s consumption tax hike.
Vowing to achieve fiscal rehabilitation, the government will not issue additional bonds, because tax revenues this fiscal year through March are likely to be higher than the initial estimate made in January, thanks to the budding economic recovery.
The Cabinet also endorsed the basic outline of the initial budget for fiscal 2014, in which it pledges its best effort to curb expenditures without exception and keep new debt issuance in the next fiscal year below that of fiscal 2013.
The Abe administration will introduce the stimulus package in early fiscal 2014 — centering on promoting reconstruction work in the disaster-hit Tohoku region and new infrastructure investment ahead of the 2020 Tokyo Olympics.
The package is expected to make up for a roughly ¥2 trillion decline in demand feared from the 3 percentage-point consumption tax hike to 8 percent in April.
Public works projects are believed to have immediate effects on the economy, but they mainly benefit big companies. To fend off criticism that the Cabinet has given preferential treatment to large firms, it decided to bolster measures for households.
Under the extra budget, ¥3.13 trillion will be earmarked to accelerate post-quake reconstruction work and disaster prevention steps, including ¥80.5 billion to decontaminate areas near the Fukushima No. 1 nuclear complex.
The administration also allocated ¥1.42 trillion to bolster industrial competitiveness and ¥300.5 billion for employment measures for women, the young and the elderly.