Japan approves record $1 trillion budget amid debt concerns

By Tetsushi Kajimoto

TOKYO (BestGrowthStock) – Japan’s parliament approved on Wednesday a record $1 trillion budget for the fiscal year from April, with an all-time high of 44.3 trillion yen ($490 billion) in new bond issuance underlining the country’s tattered finances.

Prime Minister Yukio Hatoyama has said he sees no need for economic stimulus now as the risk of a double-dip recession is receding. But he added that the government should be ready to act if necessary given lingering downside risks such as unemployment.

“I think we can avoid a double-dip but it is important to prepare so we are able to take appropriate steps as needed,” Hatoyama told lawmakers in parliament.

A tiny coalition partner in the Democratic Party-led government has called for 11 trillion yen in fresh stimulus to boost the economy before an election expected in July, amid sliding support for the government.

But analysts said big spending is unlikely as public debt is already nearly twice the size of Japan’s GDP, the highest ratio among its peers in the industrialized world.

The government is keen to contain any further increase in bond issues amid the threat of a credit ratings downgrade.

Finance Minister Naoto Kan said the Democrats will need to review their campaign pledges so as to keep spending in check as the government plans to map out its mid-term fiscal plan in June.

Most economists expect a strong recovery in Asia to help Japan sustain its export-driven pickup from its worst recession in post-war history.

Stock Market Advice

($1=90.45 Yen)

(Reporting by Tetsushi Kajimoto; Editing by Joseph Radford)

Japan approves record $1 trillion budget amid debt concerns