The Japanese cabinet on Sunday, December 24, approved a budget totalling 82.65 trillion yen ($738 billion) for the next fiscal year with the aim of securing the recovery of the world's second-largest economy.
Prime Minister Yoshiro Mori's cabinet approved the budget for the year starting April 2001, a spokesman for the prime minister's office said.
The budget, which will be submitted for parliamentary approval in January, marked the first spending cut in six years, down 2.7 percent from the current year's initial budget, because of lower debt repayment costs.
But it included a record 48.7 trillion yen in general spending, the largest component of the budget which covers everything from defense to education, in an effort to spur Japan's snail-paced economic recovery.
Finance Minister Kiichi Miyazawa said the budget would help secure economic revival.
"Under this budget, the economy will take a self-sustained recovery track," Miyazawa told a news conference.
Chief Cabinet Secretary Yasuo Fukuda said the government had prioritized stimulating the economy over fiscal reform.
"Economic recovery is the most important element" in compiling the budget, Fukuda told a news conference.
"At the same time, the government must implement structural reforms. We are carrying out the reforms to the extent that it does not foil economic recovery," he said.
While Tokyo made its fresh vows to spur growth, concerns about the US and Japanese economies were increasing.
On December 21, the US government revised down its economic growth in the third quarter to 2.2 percent, against its earlier forecast of 2.4 percent.
The 2.2 percent growth was the slowest rate of economic expansion since the third quarter of 1996, confirming a marked cooling in the US economy.
Two days earlier Japan revised down this year's growth forecast to 1.2 percent, against the 1.5 percent projected earlier.
The Japanese government also said it hoped to achieve a modest 1.7 percent economic growth for the next fiscal year, down on the 2.0 percent forecast by Miyazawa.
Aside from the weaker economic forecasts by Washington and Tokyo, share prices have tumbled as the US tech-heavy Nasdaq nosedived 7.2 percent on December 20 while Tokyo's Nikkei index plunged three percent to the 13,000-point level.
In the new budget, the finance ministry will issue 28.32 trillion yen in government bonds in the year to March 2002, down 13.2 percent, as part of the government's effort to cut a national debt which has ballooned as a result of stimulus packages.
Japan's outstanding national debt, held by both the central and local governments, will reach a record 666 trillion yen by March 2003 -- 1.28 times more than the nation's nominal gross domestic product -- the ministry said in a separate report.
The government will submit the budget for approval to Diet convening in January.
"Economic recovery is the foremost task for Japan. The budget reflected our resolve to achieve that goal," a finance ministry official said.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
