Lawmakers on Wednesday enacted a ¥3.32 trillion extra budget for fiscal 2015. The plan aims to bolster the economy through greater social support and a more competitive farming sector.
The supplementary budget for the period through March was approved by the House of Councilors, in which the ruling Liberal Democratic Party and Komeito hold a majority of seats.
The extra budget will extend support for child-rearing, as well as keeping people in work even if they feel compelled to quit their jobs to take care of elderly relatives.
It was endorsed by Prime Minister Shinzo Abe’s Cabinet last month.
The government also aims to improve the international competitiveness of Japanese farmers in the wake of the Trans-Pacific Partnership free trade agreement.
A total of ¥3.50 trillion will be used to fund policy measures, although the actual size of spending under the budget will be ¥3.32 trillion, given the recent trend of lower interest rates that decreases debt-servicing costs for the government.
The extra budget allocates ¥1.16 trillion for enhanced social security, including support for child-rearing and nursing care.
There is a handout for pensioners, a group that benefits less from the prime minister’s stimulus efforts to raise wages. Eleven million people will receive a gratuity of ¥30,000 in June, shortly before the Upper House election in July.
The handout is meant to boost spending, which is seen as key to reviving the world’s third-largest economy.
The opposition Democratic Party of Japan has criticized the payments as cynical politicking.
“It is a pork-barrel measure to win the election using taxpayers’ money,” party leader Katsuya Okada said during a Diet debate.
Abe countered that the payments will be only “a one-time measure.”
The government will allot ¥340.3 billion to help the agricultural sector win foreign investment and also to compete better against cheap imports when the TPP accord comes into effect.
The supplementary budget is intended to help the agricultural industry become more competitive, Abe told an Upper House budget committee session Tuesday. He added, it also aims to “directly link the effects of the TPP to revitalize the economy and regional areas.”
With the budget, the government will also accelerate reconstruction in areas devastated by the March 2011 earthquake and tsunami, and finance counterterrorism measures ahead of a Group of Seven summit in Japan in late May.
The government will not issue debt to fund the extra budget but will instead use tax revenues for the fiscal year, which are expected to top its projection partly due to robust corporate earnings. It will also use unspent funds from the previous year’s budget.
The extra budget will also be used to reduce the new debt issuance planned when the initial budget for the current fiscal year was compiled — in a nod to fiscal discipline.