TOKYO (AFX-ASIA) - The government approved a nominal 3.0 trln yen extra budget, financed partly via new bond issuance worth a net 1.32 trln, at a special Cabinet meeting, a finance ministry official said. The ministry will issue 1.68 trln yen in new bonds, as previously targeted, but now aims to reduce planned refinancing bond issuance by 358.7 bln yen.
Similarly, the supplementary budget for the year to March 2002 will be partly financed through some 1.9 trln yen of cuts in existing government spending, bringing actual new expenditure to around 1.06 trln yen. The new issuance plans include 200 bln yen of additional 20-year bonds, 400 bln yen of 15-year variable-rate bonds and 800 bln yen of 5-year notes, while shorter-term government bonds will be reduced by 76.7 bln yen.
The ministry official added that the size of regular government bond auctions will be increased to accommodate the new issuance, with 20-year auctions set at 600 bln yen, up from the current 500 bln. The government's 15-year bond auctions will be raised to 1.0 trln yen, up from the current 800 bln yen, and the 5-year auctions to 1.8 trln yen from 1.6.
The first such auctions will be held in January. "We decided on the level of new bonds to be issued through hearing the opinions of market participants," the official said. The budget for the year to March will include some 1.0 trln yen of spending on structural reform and employment boosting measures, he said.
The government will spend 550.1 bln yen of the supplementary budget on boosting employment measures, of which 350 bln will be granted to local governments to pay for additional jobs in areas such as teaching and forestry.
Some 251.1 bln yen will be used to increase lending to smaller companies, as well as 198.9 bln to accelerate structural reforms, including measures to computerise government paperwork. Additionally, the government will spend some 49.9 bln yen to shore up defences against potential terrorist attacks as well as 26.5 bln yen for measures to deal with 'mad-cow' disease. The government will finance the balance of the supplementary budget through cutting administrative costs by some 1.16 trln yen, subsidies to local governments by 377.2 bln yen and reserves for emergencies by 400 bln yen.
National debt will total 506 trln yen as of end-March 2002, including the extra spending, up from 484 trln the previous year. Including local government debts, the figure rises to 666 trln yen from 642 trln.