National / Politics

Japan to front-load budgetary spending this summer

Kyodo

Prime Minister Shinzo Abe on Tuesday instructed ministers to front-load spending earmarked in the fiscal 2016 budget in the period to September.

Abe cited growing uncertainties in the world economy, but some analysts see the move as a bid to buoy the economy prior to this summer’s Upper House election.

“The Japanese economy remains on a recovery trend,” Abe told a Cabinet meeting, according to Chief Cabinet Secretary Yoshihide Suga. “But it is a fact that uncertainties over the world economy are increasing.

“I would like each minister to move forward (budgetary spending) as much as possible in the fiscal first half.”

The comments suggest Japan will aggressively employ fiscal stimulus to counter turbulence from a slowdown in China’s economy and rock-bottom oil prices.

Specifically, Finance Minister Taro Aso said the government will advance spending on projects worth ¥12.1 trillion.

“As for public works, we will aim to make contracts on around 80 percent of the ¥12.1 trillion in the budget by the end of fiscal first half,” Aso told a news conference. Fiscal 2016 began on Friday.

The 80 percent target matches a level seen in fiscal 2009, which was unleashed in the early stages of the global recession.

In an average fiscal year, first-half implementation is less than 70 percent of the total.

If implemented as scheduled, the government would front-load more than ¥1 trillion in spending by September, officials said.

To make up for reduced spending in the second half of fiscal 2016, the government will consider compiling an extra budget for the year, the officials said.

Public works subject to early budget spending include improving roads, ports and facilities such as schools, and spending on agricultural land projects.

The government will also accelerate reconstruction in areas devastated by the March 2011 earthquake and tsunami.

In the Cabinet meeting, Abe instructed ministers to carry out early implementation of the supplementary budget for fiscal 2015 as part of efforts to spur growth.

The supplementary budget includes distributing ¥30,000 to low-income pensioners.

With Abe’s call, almost all municipal governments are expected to start such payments by the end of June.

Separately, Bank of Japan Gov. Haruhiko Kuroda told a House of Representatives panel he does not believe the economy will fall into recession, given the relatively high levels of corporate pretax profits and capital spending.

Kuroda attributed deterioration in business confidence among major manufacturers to the slowdown in the Chinese and other emerging economies. The figures were revealed in the central bank’s latest tankan survey of sentiment.

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