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Japan passes 3rd extra budget for reconstruction

(Xinhua)

17:31, November 21, 2011

TOKYO, Nov. 21 (Xinhua) -- Japan's upper house of parliament on Monday passed a 12.1 trillion yen (155 billion U.S. dollars) third extra budget to finance post-quake reconstruction initiatives, with funds also allocated to deal with the impact of a persistently strong yen on the nation's economy.

The budget has been designed to address some of the nation's economic woes, including a persistently strong yen amid a slowdown in the global economy and a debt crisis in the single currency eurozone.

Two trillion yen from the budget has been earmarked to counter the negative effects of the strong yen on Japan's fragile export sector, with 500 billion yen allocated as subsidies to encourage Japanese firms reliant on shipping domestic-made goods overseas not to move factories and related operations overseas.

The ruling Democratic Party of Japan (DPJ), the main opposition Liberal Democratic Party and the New Komeito, primarily, approved the third extra budget at a House of Councillors plenary session on Monday by a majority vote.

A related bill allowing for tax hikes to partly finance the bill will be passed on Thursday and likely to clear parliament by the end of the month.

The passage of the budget through the upper house in Japan's bicameral system of parliament is an outcome of compromises made by the ruling party to ensure support from opposition parties who control the upper chamber.

The parties agreed to raise some taxes provisionally to secure financial sources for the budget. The more powerful lower house, controlled by the ruling Democratic Party of Japan (DPJ), already passed the supplementary budget on Nov. 10.

Reconstruction bonds worth 11.55 trillion yen, to be repaid over 25 years through tax hikes, will finance the majority of the budget and the government aims to raise 10.5 trillion yen from income tax and corporate tax, over periods of 25 years and three years respectively.

The third extra budget is larger than the previous two. The first extra budget worth some four trillion yen and the second two trillion yen. The newly passed budget is the second largest-ever following the one created in 2009 to spur the economy after the Lehman Brothers-triggered global financial crisis. (1 U.S. dollar is equivalent to 76.8 yen).

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