CORRECTED-UPDATE 2-Japan deputy finmin says extra budgets may top Y10 trln

(Corrects headline to ‘budgets’, not ‘bonds’)

* Need to eye bond market impact in compiling extra budgets
– Sakurai

* Ruling party lawmakers see extra budgets likely around Y10

(Adds background)

By Kaori Kaneko

TOKYO, March 31 (Reuters) – Japan’s government may need to
spend over 10 trillion yen ($120 billion) in emergency budgets
for disaster relief and reconstruction, the country’s deputy
finance minister, Mitsuru Sakurai, signalled on Thursday.

Sakurai also said he hoped the government could ask the
public to broadly shoulder the burden for reconstruction,
signalling that a tax hike may emerge as an option.

Senior ruling party lawmakers have said total spending for
several extra budgets that the government is set to compile this
year will be around 10 trillion yen.

Asked how the government will finance extra budgets to pay
for quake-related costs, Sakurai told a news conference: “When
considering the magnitude (of the damage), I don’t think it will
be something like 10 trillion yen,” signalling the amount will
be much higher.

“We also need to take into account the bond market,” Sakurai
said, suggesting that the government would prefer not to issue
too much in extra bonds to fund steps for disaster relief.

“If we can ask the public to broadly share the burden, we’d
like to do so,” he said.

Sakurai’s remarks are in line with those of Prime Minister
Naoto Kan, who said on Tuesday he would not rule out any source
of funding for reconstruction, including a tax increase or
abandoning a plan to cut corporate tax.

The government is likely to set aside 2 trillion yen for
disaster relief in its first emergency budget to be submitted to
parliament in April, the Nikkei newspaper said on

Analysts say the government will probably need two more
extra budgets for reconstruction in the wake of the devastating
earthquake and tsunami that hit northeast Japan on March 11.

The government is still juggling delivering aid to the
worst-hit areas with a protracted battle to contain the world’s
worst nuclear crisis since Chernobyl 25 years ago.

It estimated last week that damage to roads, homes,
factories and other infrastructure from the magnitude 9.0 quake
and deadly tsunami could top 25 trillion yen, making it the
world’s costliest natural disaster.
($1 = 82.875 Japanese Yen)

(Writing by Leika Kihara; Editing by Joseph Radford)

CORRECTED-UPDATE 2-Japan deputy finmin says extra budgets may top Y10 trln