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Japan unveils record $1 trillion budget

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Yukio Hatoyama
Yukio Hatoyama

TOKYO: Japan on Friday unveiled a record 92.29 trillion yen ($1 trillion) budget for the next fiscal year, reflecting the Prime Minister’s campaign pledge to boost spending for child support and slash wasteful outlay for public works.

The budget for the year starting in April 2010 came as Japan’s economy — the world’s second-largest — struggled to shake off its worst recession since World War II amid deflation.

“This budget is to protect lives. I made all my efforts to secure budgets to support child-rearing, employment, the environment and welfare,” Prime Minister Yukio Hatoyama told a news conference after his Cabinet approved the budget.

Spending on social welfare, which includes expenditures of monthly child allowances — one of Hatoyama’s key election promises — will jump by 10 per cent from the initial budget of the current fiscal year to 27.3 trillion yen, a Finance Ministry official said. The government will start giving families 13,000 yen a month per child through junior high from April 2010 to help ease child-rearing costs and encourage more women have babies.

Japan has the lowest percentage of children among 31 major countries, trailing Germany and Italy, according to a government report. In contrast, the nation’s elderly population is swelling.

Mr. Hatoyama, who came to power in September after a historic electoral victory in August, had also vowed during the election campaign to cut wasteful spending on public works.

Public works

Mr. Hatoyama’s budget proposal earmarked 5.77 trillion yen in public works spending, down a record 18 per cent from the initial budget of the current fiscal year, the Finance Ministry official said. The budget must be cleared by Japan’s Parliament early next year to take effect. It came as Japan struggled to spur its nascent economic recovery amid falling prices and the yen’s recent strength, which hurts Japanese exporters.

Japan’s jobless rate in November climbed to 5.2 per cent, reversing an improvement to 5.1 per cent in October, the government said on Friday. The result marks the first increase since July and matches Kyodo News agency’s average market forecast of 5.2 per cent. Deflation also deepened, the government said in a separate report, with core consumer prices down 1.7 per cent in November from a year earlier.

Declining prices, which plagued Japan during its “Lost Decade” in the 1990s, can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It also can increase debt burdens. — AP


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