Don,
Japan passes 98/99 budget, focus on economic steps
(Updates with budget passage)
By Yoko Kobayashi
TOKYO, March 20 (Reuters) - Japan's key parliament house on Friday passed the regular budget for the next fiscal year,
which the government has said was the priority in helping the country's stagnant economy get back on a recovery track.
Passage of the budget now means the focus will shift to what moves Tokyo may use to nudge the economy forward a bit
ahead of the crucial year-end book closing at the end of March, and Asia-Europe Meeting (ASEM) of summit leaders in
April.
The Lower House of the parliament passed a 77.67 trillion yen ($602 billion) regular budget for the fiscal year starting on
April 1, the first budget formed under a tight fiscal austerity plan that aims to cut state debt to three percent of gross
domestic product by March 2004.
The budget must be offered to the Upper House for approval, but even without such approval it will be automatically
implemented 30 days after passage through the Lower House, since the Lower House has superiority on budget matters.
Bound by law to reduce state debts, ministers had been reluctant to clearly suggest new fiscal spending and tax cuts and
instead, repeated that quick passage of the 1998/99 budget was the best possible step for the economy.
Any fresh fiscal spending measures would need to be accompanied by more funding, such as a supplementary budget, but
drafting an extra budget was widely seen as impossible before the passage of the regular budget on objections from
opposition parties.
Once the budget is approved by the full Lower House, policy-makers are expected to become clearer on what new steps
Japan will take to boost its economy.
Government and ruling Liberal Democratic Party (LDP) sources told Reuters that the cabinet was expected to approve an
economic stimulus package ranging between 10 to 15 trillion yen ($77.5 billion to $116 billion) on March 27.
But the sources said the government was still mulling whether to include income tax cuts in the package, a long-awaited
blessing for financial markets and a curse for fiscal reformists, which would involve more government bond issues.
The sources also said that Tokyo does not expect a change in the fiscal reform law would be needed to carry out the
economic stimulus package, which would involve composing a supplementary budget.
Japanese media reported on Friday that deregulatory measures the government had been planning for late this month would
now be rolled into a single comprehensive package to including plans by the LDP for stimulus steps.
LDP policy chief Taku Yamasaki told Reuters this week the party would announce by the end of March a package worth
over 10 trillion yen to be composed mainly of public works projects in the areas of telecommunications, the environment,
education, welfare and distribution, as well as more traditional work on roads and sewerage.
Yamasaki said the package was unlikely to include income tax cuts, but that it might include smaller-scale tax rebates for
costs related to education, welfare, investments and housing.
The regular budget must be offered to the Upper House for approval, but even without Upper House approval it will be
automatically implemented 30 days after passage through the Lower House.
Media reports said the government planned to immediately start compiling a supplementary budget after enactment of the
regular budget.
LDP officials have said Japan planned to take a blueprint of its future economic plans to ASEM summit leaders meeting in
London on April 2-4, but it would take a month or so for the government to actually flesh out its plan.
According to newspaper reports, Hashimoto would be able to present the fleshed-out government package to his
counterparts from the Group of Seven (G7) industrial powers at their mid-May summit in Birmingham, England.
($1 equals 129 yen)
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