Abe’s Cabinet OKs ¥3.5 trillion extra budget to support economy

Kyodo

Prime Minister Shinzo Abe’s Cabinet approved an extra budget Friday worth ¥3.5 trillion for this fiscal year through March to bolster the economy through enhanced welfare services and a more competitive farm sector.

The fiscal 2015 supplementary budget plan is designed to realize the prime minister’s key policies, including steps to support child-rearing and prevent people from leaving their jobs to take care of their elderly family members.

The government also aims to improve the international competitiveness of Japanese farmers, in the wake of the Trans-Pacific Partnership free trade agreement recently reached by Japan, the United States and 10 other countries.

After Cabinet approval, the government will aim to have the extra budget bill enacted during an ordinary Diet session to be convened Jan. 4.

Given the recent trend of lower interest rates that decreases debt-servicing costs for the government, the actual size of spending under the extra budget will be ¥3.32 trillion, according to the Finance Ministry.

The government will not issue any debt to form the supplementary budget, instead using tax revenues for the fiscal year, which are expected to top its projection partly due to robust corporate earnings, as well as unspent funds from the previous year’s budget.

To maintain fiscal discipline, the planned budget will also be used to reduce the new debt issuance planned when the initial budget for the current fiscal year was compiled.

In the extra budget, about ¥1.16 trillion is earmarked for enhancing social security measures, including support for child-rearing and nursing care services, the sources said.

To support pensioners who benefit less from the prime minister’s drive to raise wages as part of his “Abenomics” stimuli, the government will provide ¥30,000 each to around 11 million people in June next year.

The increase in income for elderly people is intended to support consumer spending, a key to reviving the world’s third-largest economy, which remains sluggish.

The measure, meanwhile, faced criticism even within the ruling Liberal Democratic Party, with some lawmakers arguing paying the cash to pensioners is “pork barreling” and the government is giving too much preferential treatment to the elderly.

The government will allot ¥340.3 billion to help the agricultural sector cope with an increase in cheap imports when the TPP accord comes into effect.

To accelerate reconstruction in areas devastated by the March 2011 earthquake and tsunami, the government set aside ¥821.5 billion, including additional spending for decontamination from the Fukushima Daiichi nuclear power plant disaster.

To finance counterterrorism measures ahead of a Group of Seven summit next May in Japan, the government will set aside ¥14.4 billion.

In September, Abe announced his new policy “arrows” including expanding Japan’s nominal GDP from ¥490 trillion to ¥600 trillion by around 2020 and raising the fertility rate from 1.4 to 1.8 by around 2025.