The Cabinet on Wednesday approved a 3 trillion yen supplementary budget for fiscal 2001, with 1 trillion yen earmarked for structural reform.

Given the current economic situation, however, the additional funds may not be the final appropriation for this fiscal year; some senior members of the ruling coalition have already started clamoring for more spending.

The extra budget, based on a framework set by the Council on Economic and Fiscal Policy last month, allocates 26 billion yen to deal with mad cow disease and 49 billion yen for antiterrorist measures.

It should go before the Diet on Friday.

Of the 3 trillion yen, 1 trillion yen is earmarked for policy steps outlined in the government's priority reform package, including job-creation measures, quick disposal of banks' bad loans, and further deregulation in health care, education, urban renewal and other areas.

Of that 1 trillion yen, 550 billion yen will be allocated for job-creation measures and assistance for the unemployed, and 251 billion yen for supporting small and midsize firms.

The spending is designed to alleviate the pain from the massive job cuts expected as firms restructure and banks push ahead with further disposal of nonperforming loans.

The extra budget will subsidize local governments to hire displaced workers temporarily as assistant teachers at public schools and in other public service sectors.

The package includes 198.9 billion yen for priority reform measures, including 21 billion yen to build child-care facilities and 44.5 billion yen to control dioxin emissions.

The government will issue 1.68 trillion yen in government bonds to finance the spending, bringing the total fiscal 2001 debt issue to 30 trillion yen -- the ceiling that Prime Minister Junichiro Koizumi pledged for the fiscal year.

The government's dependency on debt issues to supplement revenue shortage will consequently increase from the initially planned 34.3 percent to 35.8 percent.

Nonetheless, long-term liabilities held by central and local governments as of the end of March 2002 will stay at 666 trillion yen, as projected under the initial budget.