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Japan 2011/12 draft budget at record 92.4 trln yen
December 24, 2010 / 9:22 AM / 7 years ago

Japan 2011/12 draft budget at record 92.4 trln yen

 TOKYO, Dec 24 (Reuters) - Japan's government approved a
record 92.4 trillion yen ($1.1 trillion) draft budget on Friday
for the year from next April, keeping a self-imposed cap on new
debt although it faces a tough road ahead to fix its tattered
public finances.
 The first budget that the Democratic Party-led government
compiled from scratch keeps new borrowing at 44.3 trillion yen,
in line with its promise to keep fresh debt at this year's level
to rein in a huge public debt.
 Tax revenues, seen at 40.9 trillion yen, will fall short of
new bond issues for a second straight year on an initial budget
basis, even as they increased 3.5 trillion yen from this year
with the economy's recovery from a deep recession.
 To balance the record budget, the cash-strapped government
scraped together 7.2 trillion yen of non-tax revenues, the bulk
of it by raiding cash reserves from its special accounts and
administrative agencies.
 Government officials say non-tax revenues are a near-term
solution and it will be even harder to compile budgets from next
year on without a consumption tax hike or deep spending cuts, as
welfare costs rise for the fast-ageing population.
 Highlighting the debt woes, the government estimated the
primary budget deficit -- a measure of how it finances
policy-related spending without issuing debt -- at 22.7 trillion
yen, only a slight improvement from this year.
 Japan's public debt is expected to reach 891 trillion yen, or
184 percent of GDP, at the end of March 2012, the finance
ministry said, the highest among developed nations.
 Caught between its earlier pledges to support people's
livelihoods to boost growth and the reality of securing sources
of revenue, the government has already scaled back its key
spending programmes including child care payouts to households.
 The Democrats can push the budget through parliament with
their majority in the more powerful lower house, and a rule that
allows the budget to become law after 30 days even if the
opposition-controlled upper house votes it down.
 But in order to fully implement the budget from the start of
the next fiscal year on April 1, the government needs so-called
enabling bills, such as one on issuing deficit-financing bonds,
which need to be approved by both houses of parliament.
 Without such enabling bills, the government could not secure
44 percent of its budget revenue, finance ministry officials
 The initial budget may not be the final say.
 If the economy slows, the government could announce extra
budgets. It presented one such budget this year, although
policymakers may have little leeway for pump-priming given the
large fiscal debt burden.
 The following breakdown shows initial budget figures for the
coming fiscal year and the current year ending next March.
(Figures in billion yen, changes in percent):
                          FY 11/12   FY 10/11   CHANGE
 TOTAL                      *92,411.6   92,299.2  ( +0.1)
  Tax revenues               40,927.0   37,396.0  ( +9.4)
  Non-tax revenues            7,186.6  *10,600.2  (-32.2)
  Government bonds           44,298.0  *44,303.0  ( -0.0)
  Debt servicing             21,549.1   20,649.1  ( +4.4)
  Policy spending            70,862.5   70,931.9  ( -0.1)
Tax grants to local govts 16,784.5  *17,477.7  ( -4.0)
Social security costs    *28,707.9   27,268.6  ( +5.3)
 *Asterisk shows figures are biggest on record for initial budget
 ($1=82.96 Yen)
 (Reporting by Tetsushi Kajimoto; Editing by Edmund Klamann)

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