TOKYO (Reuters) - Japan’s government approved 4 trillion yen ($48.5 billion) in spending on Friday for its first emergency budget for disaster relief, six weeks after a devastating earthquake and tsunami, and kept its promise of issuing no new bonds to fund it.
The emergency budget, which will likely be followed by more spending packages later to fund reconstruction, includes about 1.6 trillion yen of infrastructure-related spending.
It is expected to be submitted to parliament later this month and to be enacted in May.
Authorities are wary of adding to a massive public debt already twice the size of Japan’s $5 trillion economy, but additional bond issuance is likely for subsequent extra budgets that will be needed for rebuilding after the disaster, which has left nearly 28,000 dead or missing and triggered a major nuclear crisis.
Tokyo estimates the material damage alone could top $300 billion in the world’s costliest natural disaster.
Markets are keeping a close eye on how much the government will borrow to fund reconstruction costs, although Japan does not at present face a Greece-style debt crisis since its public debt is held almost entirely by domestic investors.
The actual size of the extra budget is only 305.1 billion yen, with the bulk of the 4.0153 trillion yen in outlays to be financed through spending cuts in foreign aid, payouts to families with children and other existing programs.
The government is also tapping reserves for pension payouts — seen as a sacred cow in a fast-aging society where each retiree will be supported by fewer than two workers by 2030, while the opposition opposes this approach.
Following are details of the emergency budget:
SPENDING: 4.0153 trillion yen
— Disaster relief, including temporary housing: 482.9 billion yen
— Debris and waste disposal: 351.9 billion yen
— Public works: 1.2019 trillion yen
— Restoration of infrastructure, including schools and welfare facilities such as nursing homes: 416.0 billion yen
— Disaster-related loans: 640.7 billion yen
— Tax grants to local governments: 120.0 billion yen
— Other outlays such as employment support: 801.8 billion yen
REVENUE SOURCES: 4.0153 trillion yen
— Scrapping of planned increase in payouts to families with children: 208.3 billion yen
— Reinstating specified highway tolls: 100.0 billion yen
— Abolishing certain highway toll discounts: 250.0 billion yen
— Reserves for pension payouts: 2.4897 trillion yen
— Reserves for development of nuclear power plant sites: 50.0 billion yen
— Cuts in official development assistance: 50.1 billion yen
— Cuts in lawmakers’ salaries: 2.2 billion yen
— Allocations related to public works: 55.1 billion yen
— Emergency reserves for economic measures: 810 billion yen
Reporting by Tetsushi Kajimoto; Editing by Edmund Klamann