Japan’s Cabinet yesterday approved a two trillion yen (€16.57 billion) second special budget to finance relief and rebuilding after the March 11 earthquake and tsunami.
Prime Minister Naoto Kan’s Cabinet plans to submit the proposed budget to Parliament on July 15 and aims to pass it by the end of the month.
The budget sets aside 800 billion yen in reserve for reconstruction, and 275 billion yen to tackle the Fukushima nuclear crisis, including compensation for victims and health checks for local residents.
Already faced with the industrialised world’s largest public debt at around 200 per cent of GDP, the government will not issue fresh bonds to finance the supplementary budget to March 2012 but plans to instead divert funds left over from last year.
In May, Japan passed a four trillion yen extra budget, the first since the disaster hit and left more than 22,000 people dead or missing. The government plans a third extra budget later this year, with analysts estimating it to be worth 10 trillion yen.
However, analysts warn that political gridlock surrounds those plans and other key economic measures, including a bond issuance bill.
Finance Minister Yoshihiko Noda yesterday warned that if opposition parties continue to block the bond issuance bill needed to fund 40 per cent of the main budget for the current fiscal year started April the government might have to begin curbing its spending from as early as September.
Lawmakers in the opposition-controlled Upper House are demanding Kan resign immediately, and have refused to support a number of key bills until he steps down.
The Prime Minister survived a no-confidence vote in June by promising to resign at some point in the future, and has since indicated that he will step down in late August.
The embattled Prime Minister took another blow yesterday as his disaster reconstruction minister quit, having caused a furore with scathing remarks to leaders of tsunami-hit regions.
The government has estimated costs resulting from damage from the March 11 earthquake and tsunami at 16.9 trillion yen, but this does not include expenses associated with the crisis at the crippled Fukushima Daiichi atomic plant.