The administration submitted a modified debt issuance bill Tuesday to the Diet in an attempt to win prompt support from the opposition camp and keep its spending commitments for this year.
The move, a concession by Prime Minister Yoshihiko Noda’s Democratic Party of Japan, reflects the dire need of the administration to get the bill passed so it can issue deficit-covering bonds worth more than 40 percent of spending under the fiscal 2012 budget.
Unless the bill is passed, the Finance Ministry has warned, the government will run out of money for administrative services as early as October, and this could affect people’s lives.
An earlier version of the bill already submitted to the Diet is unlikely to be approved by both chambers.
The modified bill would secure funds for the government’s contributions to basic pension benefits not only for fiscal 2012 but also for fiscal 2013, by issuing deficit-financing debt to be serviced and redeemed with proceeds from the consumption tax, which is expected to be raised starting in fiscal 2014.
The government originally tried to issue a different type of bond to help finance the pensions, in a move that would have helped delay booking actual spending and make the general account budget look smaller.
But the arrangement triggered criticism, with some lawmakers in the opposition camp describing it as “window dressing” to create the illusion that the administration is enforcing fiscal discipline.
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