Japan releases $90b to boost economy
Japan Prime Minister Shinzo Abe on Tuesday instructed his Cabinet to implement 80 percent of the government budget for public works and other projects during the first half of fiscal 2016, which started this month.
Abe aims to boost the nation’s economy by executing the budget and letting government expenditures reach the construction industry and other private businesses earlier than in typical years.
The government has allotted 12.1 trillion yen (US$109 billion) for public works and other projects this year. Under instructions from the prime minister, the government will now aim to seal contracts for 80 percent of the budget, or about 10 trillion yen ($90 billion), by September 30.
In October or later, the government will provide the economy with seamless support by compiling a supplementary budget and taking other measures for further stimulus.
Due to the slowdown of the global economy, the government has been considering measures to prevent a further downturn in the nation’s economy. Implementing the budget earlier than usual is the first such step and shows the government’s desire to lift the economy ahead of this summer’s House of Councillors election.
At a press conference after a Cabinet meeting on Tuesday, Finance Minister Taro Aso referred to the early implementation of the budget and stressed it would be done “very early during the first half [of the fiscal year].”
This is the first time the government has set a goal of expediting about 80 per cent of the budget for public works since fiscal 2009, when the government was dealing with the financial crisis following the collapse of Lehman Brothers.
According to the Finance Ministry, slightly less than 70 percent of the budget for public works is executed by the end of September in typical years. If the 80 per cent goal is achieved this year, an additional 1 trillion yen will have been spent during the first half of the fiscal year. Consequently, the effects of measures to lift the nation’s economy through public works will mostly be seen during the first half of this fiscal year.
Works for which budgets will be implemented earlier include public projects to improve roads, water supply networks and sewerage systems, and also for reconstruction of areas devastated by the Great East Japan Earthquake.
Of the 12.1 trillion yen allotted for these purposes, 8.8 trillion yen will be spent from the fiscal 2016 budget and 3.3 trillion yen from the fiscal 2015 budget carry-over.
As part of the fiscal 2015 supplementary budget, it was decided that a benefit would be paid out to pensioners whose incomes are significantly low. The government will expedite this measure so the payments reach those pensioners without delay.
Internal Affairs and Communications Minister Sanae Takaichi said she would ask local governments to work with the central government so that budgets for regional projects, including those run independently by the local governments, will also be executed early.
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