The Cabinet on Friday approved an 84.99 trillion yen budget for fiscal 2000 that leans more heavily than ever on bond issues in what is being billed as the final push to strengthen the long-fragile economy. The general-account budget, the same size as the Finance Ministry’s draft proposed Monday, will be submitted to an ordinary Diet session that begins next month. It is the largest ever and 3.8 percent more than the initial fiscal 1999 figure of 81.86 trillion yen, which was 5.4 percent higher than the previous year. Marking the second consecutive year of expansionary budgets, the latest package is being labeled as the “final push” for a recovery. “The budget includes all that will be necessary,” Finance Minister Kiichi Miyazawa told a news conference after the Cabinet approval. “There is no factor left that will require a supplementary budget” in fiscal 2000, he said, adding that the amount of bond issues should decline after next year. With the latest budget, the government targets 1 percent real economic growth in fiscal 2000, compared with the 0.6 percent revised forecast for the current fiscal year. Of the budget, 38.4 percent will be financed by a record 32.61 trillion yen in bond issues. This will bring the outstanding government bonds, which have accumulated since fiscal 1965, to an estimated 364 trillion yen on March 31, the end of fiscal 2000. In addition, the Finance Ministry expects the combined gross debt of central and local governments to rise to 647 trillion yen — 30 percent more than the nation’s gross domestic product and the worst ratio in the industrialized world. As for the yearly deficit in fiscal 2000, the combined national figure is estimated at 9.4 percent of the GDP, far larger than the other Group of Seven industrial countries. The Organization for Economic Cooperation and Development estimates the fiscal deficit of the United States, Germany, Italy and France will be smaller than 2 percent of their GDPs, and Canada and Britain will keep posting fiscal surpluses in calendar 2000. The general expenditure portion of the budget — overall general-account outlays minus debt-servicing costs and tax grants allocated to local governments — totals a record 48.09 trillion yen, 2.6 percent more than the initial fiscal 1999 budget. The debt servicing, including interest payments and bond redemption, comes to 21.97 trillion yen, exceeding 20 trillion yen for the first time. The increase is mainly attributed to the 4.5 trillion yen put in the bond-redemption fund to prepare for losses by failed banks. The total bracket of funds to handle banking failures and protect depositors will be expanded from 60 trillion yen to 70 trillion yen, though no immediate spending is required. While the latest budget features fresh funds of 120.6 billion yen to promote technological innovation in key areas, the 9.93 trillion yen earmarked for public works spending is the biggest element meant to stimulate the still-fragile economy. The 9.93 trillion yen, the same amount as this year, includes 500 billion yen reserved for unspecified public projects. Since the ministry proposed the draft budget Monday, an additional 50 yen billon has been allocated to some of the projects requested by ministries and agencies. For example, official development assistance outlays have been increased by 3.3 billion yen from the draft budget to 1.05 trillion yen. The increase is mainly due to a 3 billion yen rise in bilateral grants, which total 251.1 billion yen. As a result, total ODA spending is down only 0.2 percent from the previous year. But on a dollar basis, the figure should be 14 percent higher than fiscal 1999 because of the yen’s sharp appreciation, the Finance Ministry said.
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