2ND LD: Lower house clears 81.79 tril. yen FY 2003 budget

Japan Policy & Politics, March 10, 2003

TOKYO, March 4 Kyodo

(EDS: ADDING KOIZUMI'S QUOTES AT 9-12 PARAS)

The House of Representatives passed an 81.79 trillion yen state budget for fiscal 2003 on Tuesday afternoon, ensuring it will be enacted in time for the new fiscal year starting April 1.

The scale of the fiscal 2003 budget is 0.7% larger than the initial budget for fiscal 2002, the first time in three years the general-account budget has been larger than in the previous year.

It includes 47.59 trillion yen in discretionary spending called general expenditures, up 0.1% for the first expansion in the policy-related expenditures in two years.

Funds for key policy programs, including public works projects, were slashed. But increases in obligatory costs including social security pushed up the total figure.

Japan will go deeper into debt to finance the spending. According to the budget, the government will increase new issues of government bonds to 36.45 trillion yen.

The amount is the highest ever for an initial budget and up 21.5% from the 30 trillion yen cap on new bond issues Prime Minister Junichiro Koizumi set for the initial fiscal 2002 budget to control Japan's ballooning debt.

The budget will be further deliberated at the House of Councillors, or the upper house. But the powerful lower chamber's endorsement ensures the budget's enactment after 30 days, in this case April 2, even without an upper house vote.

The Constitution allows a state budget approved by the lower house to be automatically enacted even if the upper house fails to act on it within 30 days after it clears the lower house.

''Implementation of budgets is the most (effective) economic measure,'' Koizumi told reporters at his office.

The premier also said he was relieved that the lower house's passage of the budget bill has ensured that a supplementary budget for fiscal 2002 and the full-year budget for the following year will be implemented without discontinuation.

The extra budget cleared parliament in January.

Koizumi dismissed an impatient call for an extra budget for fiscal 2003 from some senior lawmakers of his governing coalition, saying, ''We are still discussing the full-year budget.''

Economic and fiscal policy minister Heizo Takenaka said, ''The most important point in our plans to fight deflation and bolster the economy is to implement the fiscal 2002 extra budget (enacted in January) and the fiscal 2003 budget without a pause in between.''

''We must try to realize an early enactment'' of the fiscal 2003 budget, he said.

The budget cleared the lower chamber's Budget Committee on Monday night.

Although the governing coalition parties had hoped to hold a vote on the budget in the full lower chamber Monday, political squabbles forced a one-day delay.

Opposition parties had moved to block the coalition's plan to pass the budget through the lower house Monday, demanding further explanations about a scandal involving farm minister Tadamori Oshima.

They said they were dissatisfied with explanations regarding the misappropriation of funds by Oshima's former aide, and the fact that Oshima had consulted with the lower house's legislative bureau on ways to deal with the scandal.

Looking back on discussions at the Budget Committee, Finance Minister Masajuro Shiokawa said, ''Political games took over at a certain point, and I think there was much more discussion on topics other than the budget and the economy.''

Critics, who say the budget is too small, are already calling for a supplementary budget for fiscal 2003. But Takenaka rejected that demand.

''In the (fiscal 2003) budget, we have made our best efforts within the scope that can be predicted,'' Takenaka said.

''We must achieve a fiscal primary balance on a mid- to long-term basis,'' he said, as the government plans to achieve conditions in which government spending equals revenues, excluding debt-servicing costs and government bond revenues, in the early 2010s.

''But given that the state of the economy has reached a plateau, we must also take steps for it as much as possible. I think the budget manages to achieve that narrow path,'' he said.