TOKYO (AFX-ASIA) - State Minister for Economic and Fiscal Policy Heizo Takenaka said the government needs to study options to cope with future global economic turmoil even though it is not considering a second extra budget at present.
"We are not considering whether to compile a second supplementary budget at this stage but, as we cannot predict future events in the world economy, we need to consider a variety of possibilities to cope with this," he said.
Takenaka was speaking to reporters after a meeting of the government's Council on Economic and Fiscal Policy, which endorsed the finance ministry's existing supplementary budget plan.
"The government will have concentrated debate on the future budget in November. At that point, we will discuss the next fiscal year's budget and try to assess economic developments," he said.
"As the US-led military action on the ground has just begun, it hard to reach a conclusion on additional budget action," Takenaka said. The finance ministry's outline for the supplementary budget for the year to March 2002 shows the government will spend 1 trln yen on structural reform-related measures.
These involve mainly employment boosting policy actions, as well as securities and other financial-market reforms, a ministry paper presented by Finance Minister Masajuro Shiokawa at the meeting shows. Some 1.7 trln yen will be spent in other areas, such as increased administrative costs as well as a minimum 50 bln yen on helping industries affected by mad-cow disease and the affects of the Sept 11 attacks on the US.
The government will issue new bonds of around 1.68 trln yen to finance this spending.
It will also curtail administration expenses and reduce subsidies to local administrations, as well as using existing public-works reserves of 300 bln yen.
Administrative expenses will be cut by at least 1.1 trln yen, with subsidies to local governments cut by 380 bln yen. The government will also utilise the outstanding surplus from the previous year's budget totaling 460 bln yen.