Japan: Parliament approves the second additional quake relief budget
July 25, 2011
On 25 July, the parliament passed an extra budget bill of JPY 2 trillion (USD 25 billion), which aims to assist the victims of the 11 March earthquake. The second supplementary budget paves the way for the long-awaited third extra budget, which is expected to amount to some JPY 10 trillion (USD 123 billion) and satisfies one of the three conditions that the Primer Minister Naoto Kan (Democratic Party) set out in his promise to resign. The two other conditions include passing a measure to promote the use of renewable energy sources and, of particular not, to approve a bill allowing the government to issue deficit-covering bonds in the current fiscal year. Nevertheless, an early call is not likely as the Democratic Party may lose seats, while the governmental party currently holds a strong majority in the lower house, but not in the opposition-dominated upper house. The second additional budget includes further assistance for individuals and small companies, as well as financial aid for the Tokyo Electric Power Co., the Fukushima plant's operator. The package will not involve the issuing of new bonds, as it will be funded by the fiscal budget surplus from last year. In contrast, some analysts expect the third extra budget to comprise special reconstruction bonds with a five-year maturity as well as tax hikes. The new reconstruction measures will lift the already high public debt burden, which currently accounts by around 200% of GDP.