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Journalism of Courage
TOKYO, DEC 21: Japan on Monday outlined its biggest ever budget for the coming fiscal year, to stimulate the economy out of its long-recession but whose record bond issuance will drag the nation even deeper into debt. The finance ministry issued an 81.86 trillion yen ($711 billion) draft budget for the fiscal year starting next April, up 5.4 per cent from the initial budget for this fiscal year, which ends on March 31.
The budget, which will be topped up with some 50 billion yen in extra spending for various ministries before being ratified on Friday as the official government draft, aims to help the economy achieve the 0.5 per cent fiscal 1999-2000 economic growth promised by prime minister Keizo Obuchi.
"For the time being, we will support the economy with public demand and then smoothly pass the baton to private-demand-led economic growth through a recovery in personal consumption," Obuchi told.
But, many economists fret that the huge increase in debt to finance the government’s public works and taxcuts will further push up long-term interest rates, thus undermining the very stimulus that the spending is meant to generate. To pay for the budget, which the government will submit to Parliament in January, the government will float a record 71.13 trillion yen in bonds, including 31.05 trillion yen in fresh bond issuance.
