The next extra budget for fiscal 2011 is likely to amount to ¥2.53 trillion, including financial support for smaller businesses suffering from the recent sharp rise of the yen, sources said Wednesday.
Prime Minister Yoshihiko Noda's Cabinet is expected to agree next Tuesday to a draft of the fourth supplementary budget for the year ending March 31. It will be sent to the Diet early next year.
The government will not issue new bonds to compile the emergency budget as Noda wants to address the national debt, the worst among major developed countries.
It will instead use the surplus money for fiscal 2011, such as the remainder of the funds originally set aside to service the existing debt caused by the trend of lowering long-term interest rates. The government can also depend on tax revenues for the fiscal year, which would top the amount that the Finance Ministry earlier projected, the sources said.
The fourth budget will earmark some ¥740 billion for steps to help small and medium-size firms secure working funds as they suffer from the yen's strength against the dollar and other major currencies, which pares their overseas profits when repatriated, as well as from the flooding in Thailand, where major Japanese manufacturers have production bases.
The government plans to spend ¥300 billion to reintroduce a subsidy program for one year for those who purchase environmentally friendly vehicles, to fight global warming, as well as to boost domestic car sales as automakers and parts suppliers in the country are among major exporters suffering from the stronger yen.
As a way to support farmers, the government will set aside about ¥160 billion. Noda has been forced to offer the state's support to enhance the agricultural sector since his announcement last month to join talks for the Trans-Pacific Partnership.