Japan drafted a record ¥88.55 trillion (US$1 trillion) budget for next fiscal year in a bid to revive Asia’s biggest economy, which is slipping deeper into recession, officials said.
The finance ministry late on Saturday proposed the general account budget for the fiscal year starting April, at an all-time high of ¥88.548 trillion, up 6.6 percent from the initial fiscal budget for this year.
The increase reflects an emergency economic package that Japanese Prime Minister Taro Aso announced earlier this month in a fresh bid to stave off a prolonged recession in the world’s second-largest economy.
Despite the expanded spending, the country’s revenue “is likely to fall due to tough economic conditions, so the ratio and the amount of the government debt both will worsen,” the finance ministry said in a statement.
The ratio of government debt to revenue will increase to 37.6 percent in fiscal 2009 from 30.5 percent in fiscal 2008 to March, while the outstanding government debt will increase to ¥581.1 trillion from ¥563.2 trillion in fiscal 2008, it said.
The ministry’s draft will be thoroughly reviewed as Aso will determine priority areas such as steps for job security and emergency economic measures, local media reported.
Aso’s Cabinet is scheduled to adopt the final draft budget on Wednesday which then will be submitted to the parliament next month.
Earlier this month, Aso unveiled a giant US$255 billion stimulus package, vowing that Asia’s largest economy would be the first to beat a once-in-a-century financial tsunami.
Aso said that the new package would total ¥23 trillion, including measures to shore up corporate financing, loans for the growing number of workers losing temporary jobs and tax cuts for homeowners.
The package comes on top of a ¥26.9 trillion stimulus which Aso unveiled in October.
The government on Friday forecast zero growth for next fiscal year, Japan’s first zero growth forecast in real terms in seven years as its economy is battered by slowing demand overseas for its exports and a slump in domestic demand.
The Bank of Japan Friday cut its already super-low interest rates to 0.1 percent to support the economy financially.
The global economic crisis has plunged Japan into recession in the current year to next March, despite earlier government projections of growth.