Japan’s ruling bloc calls for $92B fiscal package to support growth

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    Extra budget. The ruling bloc’s requests for extra budget focus on spending for disaster relief from a string of typhoons that struck Japan earlier this year and funding to help farmers cope with fallout from a US-Japan trade deal that opens some markets to US goods. (Reuters Photo)
    Extra budget. The ruling bloc’s requests for extra budget focus on spending for disaster relief from a string of typhoons that struck Japan earlier this year and funding to help farmers cope with fallout from a US-Japan trade deal that opens some markets to US goods. (Reuters Photo)

    TOKYO- Japan’s ruling coalition lawmakers have called for an extra budget that would include $92 billion in spending to support slowing growth, party officials said on Thursday, raising worries about straining public finances.

    The agreement, made in a meeting between senior officials of Japan’s ruling coalition on Wednesday, highlights the concern among lawmakers about the economic outlook thanks to a sales tax hike in October and slowing global demand.

    “Prime Minister (Shinzo) Abe told us to compile a sizable package to take all possible steps on the economy,” Economy Minister Yasutoshi Nishimura told a news conference on Wednesday.

    “We want to craft a strong economic package, taking into account the economic situation, global economy and damage caused by typhoons, which were larger than last year, so as to get the economy on a solid growth path.”

    However, analysts have doubts about Abe’s ability to spend such a large amount given Japan’s government debt, which is twice the size of its $5 trillion economy and the industrial world’s heaviest public debt burden.

    “Even if the government secured a budget for big public works, it would be difficult to implement it smoothly,” said Kiichi Murashima, economist at Citigroup Global Markets Japan.

    “Chances are low for the government to compile a supplementary budget worth 10 trillion yen ($92.19 billion). We expect the size of this fiscal year’s extra budget to fall short of 5 trillion yen.”

    The government will compile a supplementary budget for the current fiscal year ending March 2020, as well as next fiscal year’s budget plan in December, allowing funds to be disbursed over a 15-month period, sources said.

    Both budget drafts need parliamentary approval to take effect.

    Supplementary budgets of more than 10 trillion yen have only been compiled four times in the past, including after Japan’s devastating earthquake and tsunami in 2011.

    The ruling bloc’s requests focus on spending for disaster relief from a string of typhoons that struck Japan earlier this year and funding to help farmers cope with fallout from a US-Japan trade deal that opens some markets to US goods, the Nikkei business daily reported on Thursday.

    “We need a huge supplementary budget sized at least around 10 trillion yen,” Abe’s Liberal Democratic Party’s (LDP) heavyweight Toshihiro Nikai was quoted as saying on Wednesday.

    “Japan’s economic outlook has become uncertain due to the impact from the sales tax hike, natural disasters and the US-China trade friction,” Yosuke Takagi, a senior official of the LDP’s ruling coalition partner the Komeito party, was quoted as saying after the meeting. – Reuters