TOKYO (Kyodo) — Japan’s parliament approved Wednesday a fourth extra budget for the current fiscal year that will assist companies struggling as a result of the March 2011 earthquake and tsunami as well as the recent sharp appreciation of the yen, which has weighed on the country’s exports.
The House of Councillors voted for the 2.53 trillion yen ($32.8 billion) supplementary budget for fiscal 2011 ending March, which will also finance the reinstitution of tax breaks for the purchase of environmentally friendly vehicles, in support of carmakers, a major casualty of the stronger yen.
The focus is now shifting to deliberations on a 96 trillion yen draft initial budget for the next fiscal year. Diet affairs chiefs from Prime Minister Yoshihiko Noda’s Democratic Party of Japan and two major opposition parties agreed earlier in the day to hold question-and-answer sessions on Thursday, Friday and Monday, lawmakers said.
The approval of the extra budget by the opposition-controlled upper chamber followed its endorsement last week by the more powerful House of Representatives, where the DPJ-led coalition controls a majority.
The budget sets aside 500 billion yen, with which the government will offer credit guarantees when a state-backed entity raises funds to purchase debt from financial institutions in order to support companies suffering from “dual loan” problems, as they have to borrow from lenders to rebuild their businesses following the March 2011 disaster in addition to their existing debt.
Among other steps, the government will facilitate fundraising by smaller companies as many of them, including parts suppliers, are affected by sluggish manufacturing activity at major exporters such as automakers and high-tech companies, whose profitability has been eroded with the yen’s appreciation to record levels against other major currencies.
The government will not issue any bonds to finance the supplementary budget but will instead tap into tax revenues for fiscal 2011 that are higher than earlier projections as well as a surplus in funds originally set aside to service existing debt, thanks to long-term interest rates remaining lower than expected.
(Mainichi Japan) February 8, 2012