Budget compilation is a big challenge for the new administration of Democratic Party of Japan leader Yukio Hatoyama. The administration has to carry out the task with speed and painstaking care to prevent the economy from plunging into another downturn.
The economy grew an annualized 2.3 percent (revised) in the April-June period from the previous quarter, marking the first growth in five quarters. But consumer spending is sluggish with prices falling, and the employment situation is still bad. Speedy action by the new administration is also required to satisfy people's desire to see concrete changes quickly.
DPJ-proposed measures such as child allowances, making public high schools free, ending surcharges on road-related taxes, toll-free expressways and income compensation for farmers will require ¥7.1 trillion in fiscal 2010. The DPJ hopes to suspend disbursement of part of the ¥4.36 trillion allocated to 46 funds included in the fiscal 2009 supplementary budget. But it is unclear how much money the party can free up.