Japan's Cabinet discuss FY 2011 budget initiative to reign in world's highest public debt

14:37, July 27, 2010      

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Japan's cabinet members on Tuesday met to discuss a fiscal initiative to allocate 1 trillion yen (11. 51 billion U.S. dollars) to help jump-start the nation's sluggish economy in a fiscal 2011 budget and introduce a 10 percent spending cut across all government ministries and agencies as Prime Minister Naoto Kan wrestles to restore the nation's ailing fiscal health.

The budget proposition, largely believed by political insiders to be green lit, will be formalized into a request guideline for the government bodies, who themselves will be asked to submit their spending plans to the Ministry of Finance (MOF) by the end of August.

The allocation of 1 trillion yen, one of the frost of its kind, needs to be secured as part of the government's overall plans to put a cap on spending at 71 trillion yen (817.21 billion U.S. dollars), in a bid to avoid the crippling sovereign-debt issues that, if not careful, Japan could soon be facing according to notable economists.

The latest initiative, however, has not been met with complete support from all cabinet members as some have already slashed their own ministries' budgets in fiscal 2010 to meet previous fiscal requirements and are reluctant to make further cuts that may not be in the public's best interests.

Japan's public debt is nearly twice the size of its 5 trillion U.S. dollar economy, the worst ratio among industrialized nations.

Credit agencies have warned of possible "euro zone style" downgrades to Japan's debt rating as the Democratic Party of Japan 's (DPJ) loss in an upper house election this month jeopardized efforts to rein in the country's huge public debt.

"Our finances are in the worst state compared with other developed countries and it is difficult to rely on bond issuance," Finance Minister Yoshihiko Noda said at a meeting of regional finance bureau chiefs.

"We must work to rebuild our finances," he said.

Source: Xinhua


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