TOKYO (Kyodo) — The Japanese government will need to spend at least 23 trillion yen ($291 billion) on reconstruction projects over the next decade following the March 11 earthquake and tsunami, and is planning to expend around 80 percent of the funds during the first half of the period, officials said Thursday.
In order to secure necessary funds, the government is considering spending cuts of around 500 billion yen every fiscal year to be achieved by revising key policies, selling some state-owned assets such as housing for government officials and newly issuing “reconstruction bonds” that would be serviced with the proceeds from tax hikes worth 10 trillion yen.
The plans are expected to be included in basic guidelines that the government is aiming to complete within this month. Prime Minister Naoto Kan and members of his Cabinet met and outlined the guidelines but fell short of finalizing the figures.
Tatsuo Hirano, minister in charge of reconstruction, told reporters after the meeting that he wants to get the numbers finalized through talks between relevant ministers before setting the guidelines.
In the wake of the 1995 Great Hanshin Earthquake, the government spent a total of 11.6 trillion yen on reconstruction projects in the following decade, with around 80 percent of the funds used up in the first five years.
Earlier in the day, the ministers agreed on the scope and length of reconstruction projects.
The spending over the next five years, totaling around 19 trillion yen, would cover projects such as demarcating land affected by the March 11 disaster, relocating people who used to live in devastated areas as well as infrastructure development related to the farming and fisheries industries.
Workers construct temporary housing for people whose homes were destroyed by the March 11 earthquake and tsunami in the grounds of a school acting as a shelter in Rikuzentakata, Iwate Prefecture, Japan, Sunday, March 20, 2011. (AP Photo/Matt Dunham)
The government has already drawn up two extra budgets for fiscal 2011, totaling around 6 trillion yen, and the focus is shifting to how it will secure another 13 trillion yen at a time when the country’s public finances are the worst among major developed economies.
Unlike the two supplementary budgets, the government is expected to rely on debt in the form of reconstruction bonds to create a third budget. But amid the need for fiscal discipline, it is aiming to secure funds for servicing the bonds through such measures as temporary tax hikes.
Details have yet to be worked out on possible tax increases, but it is widely expected that income and corporate taxes will be raised.
(Mainichi Japan) July 22, 2011