The 82.65 trillion yen fiscal 2001 state budget, featuring a record-high 48.66 trillion yen to fund policies to bolster the economy, was enacted Monday evening.
The budget had long been seen as an obstacle to solving the country’s political morass. As calls for Prime Minister Yoshiro Mori to step down have continued to grow, LDP heavyweights have insisted that the budget be enacted before the question of Mori’s successor be addressed.
With the budget out of the way, political attention now shifts to an upcoming LDP presidential election.
Mori currently holds the post of president, a quasiprerequisite to becoming prime minister. He has agreed to move up the election from September to as early as April.
The budget was approved by the House of Councilors Budget Committee and cleared the chamber’s plenary session with the backing of the ruling coalition — the Liberal Democratic Party, New Komeito and the New Conservative Party.
Its passage through the Diet was third-fastest since the end of the war, following those passed on March 17, 2000, and March 22, 1995.
The budget, submitted by the government Jan. 31, was sent to the Upper House after clearing the House of Representatives on March 2.
Prior to the Upper House plenary session in the late afternoon, the budget cleared the Budget Committee, which was attended by Prime Minister Yoshiro Mori, who had just returned from Russia after meeting with President Vladimir Putin.
The government has been calling for early passage of the budget to revive the economy. The fiscal 2001 budget aims to bring about growth of 1.7 percent for fiscal 2001, which begins Sunday.
Despite recent uncertainties over the economy, economic ministers have said the government is not considering revising downward the fiscal 2001 growth projection.
The slowing U.S. economy is reducing Japan’s exports, in turn affecting domestic production. Corporate capital spending is also expected to slacken.
The general-account budget marks a 2.7 percent decrease from the initial fiscal 2000 budget, the first decline in six years.
The budget, however, features a 1.2 percent increase in general expenditures to a record 48.66 trillion yen for public works, social security and other policy programs, marking the third consecutive year of rise.
Public works spending is set at 9.44 trillion yen, and an additional 300 billion yen has been set aside to provide additional stimulus public works if needed.
New bond issues in fiscal 2001 will be reduced by 13.2 percent to 28.32 trillion yen, down for the first time in three years, but the ratio of bond issues to the total general-account budget remains high at 34.3 percent.
The nation’s finances will worsen further, with the combined balance of long-term debt carried by the central government and local governments projected to balloon to 666 trillion yen as of the end of March 2002, up 24 trillion yen from the end of March 2001.
The budget projects total revenues in fiscal 2001 to reach 54.33 trillion yen, including 50.73 trillion yen in tax and stamp revenues.
National debt-servicing costs, most of which are funds to redeem government bonds that fall due during the year, will drop 21.8 percent to 17.17 trillion yen, while tax grants to local governments will be raised 12.7 percent to 16.82 trillion yen.
Mori lauds ‘solidarity’
Following the budget’s passage Monday, Prime Minister Yoshiro Mori thanked Diet members in the ruling camp and promised that it will be spent effectively in a way to boost the nation’s economy.
Mori said the swift passage was a result of “efforts” made by both Diet chambers and the “solidarity” of the three ruling parties.
“I am grateful that the Diet has reacted to the current economic situation in the most positive manner,” Mori told reporters at the Prime Minister’s Official Residence.
Mori added that he hopes the swift implementation of additional public works projects to be financed by the 82.65 trillion yen budget will give the economy a push.
The prime minister, meanwhile, refused to answer a prearranged question about the LDP’s upcoming presidential election by ending the press conference with a quick “That’s it!” and turning his back to the cameras.
No extra budget seen
Finance Minister Kiichi Miyazawa said Monday that he currently feels no need for the government to compile a supplementary budget for fiscal 2001, which begins Sunday.
Miyazawa’s comment came after the 82.65 trillion yen fiscal 2001 budget was enacted by the Diet earlier in the day.
“I said earlier that corporate capital investment may peak around August, but there is still time until then,” Miyazawa said. “I don’t feel we need an extra budget now. I don’t see any areas that need to be supplemented.”
Miyazawa said this is based on his belief that economic indicators, including private consumption, in the January-March quarter may not be as bad as expected.
Some ruling party politicians and some Cabinet members have raised the possibility of additional fiscal stimulus to support the economy.
By subscribing, you can help us get the story right.