The Cabinet on Friday approved the final version of an expansionary 81.86 trillion yen general account budget for fiscal 1999 that calls for an 11 percent increase in public works spending.
The budget will be submitted to the ordinary Diet session expected to begin on Jan. 19.
It is the largest ever and 5.4 percent more than the austere initial fiscal 1998 figure of 77.67 trillion yen, reflecting the government’s determination to spark an economic recovery through spending.
But the spending spree will exact a toll. It will be partly funded by a whopping 31 trillion yen in bonds, putting the nation deeper into debt. Government bonds are expected to account for 37.9 percent of the spending by the end of fiscal 1999, which starts April 1.
Yet Finance Minister Kiichi Miyazawa only stressed the priority of pump-priming measures in the budget. “In terms of fiscal measures, we have prepared the best we can afford” to achieve targeted growth of 0.5 percent in the next fiscal year, Miyazawa told a news conference.
Asked if additional spending will be necessary during the year, he said, “I am not considering it. This is the best, and there is no room to spend more.”
Since the Finance Ministry issued a draft budget Monday, some additional allocations have been made. For example, official development assistance outlays gained a 0.2 percent year-on-year increase to 1.049 trillion yen, compared with the 0.2 percent decline in Monday’s draft.
A year ago, the initial budget saw a 10.4 percent plunge.
In defense, 780 million yen was newly set aside for upgrading the Air-Self Defense Force radar system to better detect ballistic missiles. This is a reaction to North Korea launching a missile — which Pyongyang claimed was a rocket carrying a satellite — over northeastern Japan in August.
In this context, 960 million yen was already earmarked in the draft for a controversial joint research project with the United States on a theater missile defense system.
In another amendment, the Financial Supervisory Agency won a budget for 135 additional staffers, including 87 inspectors, boosting the total to 540. The FSA’s lack of manpower, especially compared with its U.S. counterpart, has been a source of concern amid the financial system crisis.
The watchdog now expects to be able to inspect each major bank once a year, up from once every three years. Its total outlay increased 24.1 percent from the previous year to 6.85 billion yen.
These outlays were approved as individual ministries and agencies, in negotiations with the Finance Ministry, tried to grab shares of 50 billion yen set aside for last-ditch pleas.
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