The 5.677 trillion yen third supplementary budget for fiscal 1998 was submitted Friday to the extraordinary Diet session, and Finance Minister Kiichi Miyazawa called for a swift passage in his policy speech.

Speaking before the House of Representatives plenary sitting, Miyazawa stressed the importance of the latest economic stimulus package, worth 24 trillion yen, to pulling the nation’s economy out of recession. The extra budget, expected to clear the Diet later this month, will partly finance the record stimulus package.

Miyazawa explained that the package, which includes measures to ease the credit crunch, will boost domestic demand with public works and help economically battered Asian countries.

He confirmed that personal income tax cuts will total some 4 trillion yen next year and include lowering the maximum rate from 65 percent to 50 percent. The effective corporate tax rate will meanwhile be reduced from 46 percent to about 40 percent, from the business year beginning in April, he said.

The government will submit bills for these tax reductions to the ordinary Diet session that starts in January, he added. The finance minister also touched on the bill to freeze the belt-tightening Fiscal Structural Reform Law “for the time being” so the government can use the most resources toward an economic recovery.

The extra budget would be completely funded by issuing government bonds worth 12.33 trillion yen, officials said.

A major portion of revenues from the bond flotation would go to cover the country’s tax revenue shortfall for the current fiscal year, worth 6.88 trillion yen, they said.

The issuing of government bonds, including 7.81 trillion yen in deficit-financing bonds, would bring the total of such bonds to be issued in fiscal 1998 to 34 trillion yen.

This would bring total outstanding government bonds to some 297 trillion yen at the end of the fiscal year through next March 31.

The fresh bond flotation would also bring to 38.6 percent the ratio of government bonds to overall general-account revenues used to fund the general-account budget for the current year, the highest ever.

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