Japan's government approved a $157 billion extra budget on Friday including the issuance of new bonds to pay for the bulk of the spending on rebuilding from the March earthquake, paving the way for full-fledged reconstruction. The ruling Democrats are negotiating with opposition parties that control the upper house to secure their support, with the aim of submitting bills on October 28 and passing them next month, but they could struggle to get backing for key revenue provisions.
The 12.1 trillion yen budget earmarks 9.24 trillion yen for reconstruction spending, including about 2 trillion yen for subsidies and other measures to help companies cope with a strong yen and stem moves by firms to shift production abroad. The extra budget brings the value of all budgets for this fiscal year to a record 106 trillion yen. It is Japan's second-biggest extra budget ever after one worth about 14 trillion yen that was compiled in 2009/10 to respond to the global financial crisis. With public debt twice the size of Japan's $5 trillion economy, the government faces a delicate balancing act to pay for its biggest reconstruction effort since the years after World War Two.
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