UPDATE 1-Japan govt met targets in 2011/12 budget -finmin

* Japan to approve 2011/12 draft budget

* New JGB issues to top tax revs in initial budget for 2nd yr

* Split parliament clouds outlook for budget implementation
(Adds links, details)

By Tetsushi Kajimoto

TOKYO, Dec 24 (BestGrowthStock) – Japan has managed to meet its caps
on spending and new bond issuance in compiling a budget for the
year from next April, the finance minister said on Friday, as the
government struggles to mend its tattered public finances.

Yoshihiko Noda said he hoped the 2011/12 budget, which is
expected to be approved by the cabinet later on Friday, will help
to boost the flagging economy and job market.

But a divided parliament clouds the outlook for its
implementation, creating an additional headache for Prime
Minister Naoto Kan as he confronts low voter support and a rift
within his party.

The first budget that the Democratic Party-led government has
compiled from scratch keeps new borrowing at about 44.3 trillion
yen ($534 billion), in line with its promise to hold fresh debt
issuance to this year’s level.

Noda also said the government had adhered to a self-imposed
cap on spending, excluding debt servicing, at this year’s level
around 71 trillion yen, aiming to rein in a public debt that is
about the twice the size of its $5 trillion economy.


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The Democrats can push the budget through parliament with
their majority in the more powerful lower house, and a rule that
allows it to become law after 30 days even if the
opposition-controlled upper house votes it down.

But in order to fully implement the budget from the start of
the next fiscal year on April 1, the government needs so-called
enabling bills, such as one on issuing deficit-financing bonds,
which need to be approved by both houses of parliament.

Tax revenues are seen rising to about 41 trillion yen,
falling short of new debt issuance for a second straight year
despite an increase of about 4 trillion yen compared with this
year’s initial budget figure as the economy recovered from a deep

“The fact that new bond issuance exceeds tax revenues is not
at all normal. We need to rectify this as soon as possible,”
Economics Minister Banri Kaieda told reporters.

To balance the 2011/12 budget, the cash-strapped government
is expected to scrape together about 7 trillion yen of non-tax
revenues, the bulk of it by raiding cash reserves from its
special accounts and administrative agencies.
($1=82.96 Yen)
(Additional reporting by Rie Ishiguro; Editing by Edmund

UPDATE 1-Japan govt met targets in 2011/12 budget -finmin