The government plans to compile a ¥778 billion supplementary budget for fiscal 2016 to help deal with the aftermath of deadly earthquakes that rocked Kyushu last month, sources close to the matter said Tuesday.
To finance it, the government will avoid additional bond issuance by using reduced interest payments for government debt afforded by the Bank of Japan's adoption of a negative interest rate in late January.
The government initially booked about ¥9.9 trillion for interest payments in the initial fiscal 2016 budget but now expects those costs to drop because the yield on the 10-year government bond has declined to around minus 0.1 percent.
After the Cabinet approves the plan, Prime Minister Shinzo Abe will submit the budget to the Diet on Friday. The bill is likely to clear the House of Representatives on May 16 and the House of Councilors the following day.
The additional expenditure includes ¥700 billion for a reserve fund controlled by the Cabinet. The reserve fund is expected to be used to rebuild businesses damaged by the quakes and to repair infrastructure.
The remaining ¥78 billion will be used for such purposes as helping residents rebuild their livelihoods, building temporary housing and running evacuation facilities, the sources said.
"The budget needs to be enacted as early as possible," Abe told a meeting of government and ruling party officials. "The government and the ruling parties will cooperate and work on this issue as a top priority so people can restore secured livelihoods."