Japan to draw up 2.7 trillion yen extra budget for FY 2017

December 7, 2017

Tokyo- The Japanese government and ruling bloc are in final talks to set the size of the planned fiscal 2017 supplementary budget at 2.7 trillion yen, informed sources said Wednesday.

The budget will include funds to build nurseries to eliminate waiting lists for child care as part of efforts to realize a "revolution" in human resources development, a key policy of the administration of Prime Minister Shinzo Abe.

Expenses for reconstruction after natural disasters, disaster prevention measures and support for farmers following a broad accord on an economic partnership agreement between Japan and the European Union will be also included in the budget for the year through next March.

To finance the additional spending, the government will dip into the fiscal 2016 budget surplus and 1.2 trillion yen in funds for debt-servicing that remained unused thanks to superlow interest rates. It will also issue 1.2 trillion yen in additional construction bonds.

The government aims to secure cabinet approval on Dec. 22 for the supplementary budget and a draft regular budget for fiscal 2018. The extra budget will be presented to an ordinary parliamentary session starting early next year.

The supplementary budget will include about one trillion yen in public works outlays, including for reconstruction after a deluge in the Kyushu southwestern region in July and other disaster reduction measures.

Some 310 billion yen will be secured to support dairy and livestock farmers in preparation for the planned Japan-EU EPA. The two sides are expected to conclude the EPA talks by year-end.

Also planned are research expenses for Aegis Ashore ground-based missile defense equipment that the country plans to introduce.

Under a fiscal 2016 supplementary budget, the government issued deficit-covering bonds for the first time in seven years, due to lower-than-expected tax revenue.

The government will not place deficit-covering bonds under the planned extra budget, thanks to stable tax revenue that reflects strong corporate earnings.

But the government will additionally issue construction bonds for the second straight year in the face of requests for spending growth from the ruling camp of the Liberal Democratic Party and Komeito. Jiji Press