Prime Minister Yoshiro Mori on Wednesday formally ordered the government to draft a 10 trillion yen economic stimulus package that will include an extra budget of nearly 4 trillion yen for the current fiscal year.
The 11th pump-priming effort since 1992 is expected to be compiled around Oct. 20 and submitted to the Diet in November, a senior government official said.
Mori gave the instruction at a special Cabinet meeting held immediately after a government-ruling coalition budget conference.
Mori said the auxiliary budget should depend as lightly as possible on bond issues, given the already dangerous level of government debt.
The eight years of deficit spending have brought Japan’s national debt to more than 130 percent of GDP — the highest of any industrialized nation.
Instead of deficit-covering bonds, the government says it will use a 1 trillion yen surplus from the fiscal 1999 budget.
The package will feature projects in Mori’s four priority areas — information technology, environmental protection, the aging population and urban infrastructure. It will also cover such areas as disaster prevention, reconstruction of disaster-hit regions and public financing of small and midsize firms.
The total size of the package, including local government spending, is expected to exceed 10 trillion yen, as the three ruling parties had agreed Tuesday. The exact amount will not be known until government ministries and agencies submit their ideas for the package on Oct. 6.
The central government will take necessary steps to help debt-ridden local governments finance public works projects in the package, Mori was quoted as saying. The steps apparently include making the issuance of municipal bonds easier.
During the government-ruling coalition meeting, Liberal Democratic Party policy chief Shizuka Kamei said the new spending should be designed to help the economy get on a private sector-led growth path in fiscal 2001 and onward, the official said.
Budget as expected
Finance Minister Kiichi Miyazawa said he welcomes the size of the extra budget in that the government will be able to avoid issuing deficit-serving bonds to secure funds.
“The size of the budget falls within the range of my expectations,” Miyazawa told reporters after the budget conference of the government and the ruling coalition.
“It is a bit of progress for the government to be able to do without issuing deficit-serving bonds.”
It will be the first time in four years that the government will not issue such bonds to compile an extra budget; the extra budget is expected to be covered mainly by construction bonds and surplus funds.
Miyazawa reiterated his stance that the government will place emphasis on future-oriented economic policies under Prime Minister Yoshiro Mori’s national rehabilitation plans, which center on promoting the use of information technology.
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