Japan's cabinet agrees to extra reconstruction budget

09:35, July 06, 2011      

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The Japanese cabinet Tuesday agreed to a two trillion yen (24.6 billion U.S. dollars) draft second extra budget for fiscal 2011, earmarked to fund restoration and reconstruction initiatives following the March 11 earthquake and tsunami that devastated regions in the east and northeast of Japan.

"We have created the second budget to finance some projects that are not covered by the first budget but must be embarked on as quickly as possible," Finance Minister Yoshihiko Noda told reporters Tuesday.

As well as financing essential relief work in some of the areas worst affected by the 9.0-magnitude earthquake and ensuing tsunami, budget allocations also include provisions for the monumental fallout following the tsunami-triggered Fukushima nuclear crisis.

Japan's nuclear crisis, the worst the Chernobyl disaster in 1986, will see the government supporting those affected by exposure to radiation for up to 30-years with 275 billion yen, being set aside to cover nuclear-related costs.

According to the government's statement released Tuesday, along with 800 billion yen allocated solely for reconstruction initiatives and 546 billion yen to be apportioned between local governments in areas still reeling from the disasters, the draft budget will also be used to provide support to Tokyo Electric Power Co. (TEPCO) operator of the crippled No. 1 nuclear power plant in Fukushima prefecture.

Japanese Prime Minister Naoto Kan, whose days in office are numbered due to his plunging support rates and pressure of late for him to step down as leader from within his own increasingly fractious ruling Democratic Party and opposition parties, including the Liberal Democratic Party of Japan, reduced the size of the proposed budget to appease his opponents.

However, with initial governmental estimations of the damage caused by the quake and tsunami alone put in the region of 16.9 trillion yen, lawmakers have voiced concern that the latest draft budget may well fall along way short of what is needed.

The draft budget and related bills will be submitted to parliament on July 15 and may be ratified by July 22, officials said, but the government will not issue new debt to support the budget and Kan will have to gain approval from a divided parliament about the use of 1.45 trillion yen's worth of last year 's surplus funds.

Sources with knowledge of the matter said the finance ministry is already in the process of drafting a third extra budget for further reconstruction efforts that could be to the tune of 10 trillion yen.

The first 4.02 trillion yen supplementary budget has already been effectuated by the government.

Source: Xinhua
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