TOKYO (MNI) – Japanese Finance Minister Jun Azumi said on Friday
that the government will restrict fiscal 2012 spending, effective this
month, in order to buy time until the hung parliament enacts a crucial
bill for enabling issuance of Y38.3 trillion in deficit-financing bonds.

This kind of constraint on implementing expenditures is the first
since 1945, when World War II ended, he told reporters.

Azumi said funds totaling Y46.1 trillion in the Y90.3 trillion
national budget for the current fiscal year would be used up by
end-October without shelving expenditures.

The government will restrict all the spending except for outlays
for the police forces and troops as well as welfare benefits and funds
for rebuilding the earthquake-hit northeastern region.

It will limit transfer of funds to municipalities, which may affect
daily lives, the minister said.

The Ministry of Finance plans to trim fiscal spending by Y3
trillion in September and Y1 trillion in each of October and November,
but the government would still run out of money for fiscal programs —
except for essential services — at the end of November, said Azumi.

It is “regrettable” to see the opposition parties that control the
upper house of parliament stall on debating the key bills for the fiscal
year that began on April 1, Azumi said.

Prime Minister Yoshihiko Noda extended the 150-day ordinary Diet
session by 79 days until Sept. 8 so that lawmakers had enough time to
debate and vote on sales tax hike and social security reform bills,
which were enacted last month. But he ran out of time for winning
approval for the debt issuance bills.

At an extraordinary session to be called in the coming weeks, the
Diet will pick the next prime minister after the ruling Democratic Party
of Japan elects the party leader on Sept. 21.

It is uncertain whether Noda will be re-elected but the DPJ leader
is widely expected to assume the premiership as the ruling coalition
still has a majority in the more powerful lower house.

Azumi said the government has not discussed whether it should
resort to issuing financing bills as a means of raising necessary funds
because it is uncertain whether the government can redeem such
additional debt by the end of fiscal 2012.

It is possible to use budget reserves, he said, without
elaborating.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-6860-4820 **

[TOPICS: M$A$$$,M$J$$$,MGJ$$$]