Japan gov't could run out of money by end-Nov.: minister
By Tetsushi Kajimoto ,Reuters
September 8, 2012, 12:03 am TWN
TOKYO -- Japan's government could run out of money by the end of November, the finance minister warned, even after an emergency spending deferral to cope with opposition parties' obstruction of an expenditure-enabling bill, raising the stakes in wrangling over the timing of a general election.
Jun Azumi warned the opposition that further delays could threaten the economy's recovery from last year's earthquake and that the unprecedented 5-trillion-yen (US$63.3 billion) spending delay would give the government only limited breathing room.
Although Japan's feuding political parties are widely expected to reach some sort of compromise to avert a government shutdown, the standoff has forced a shelving of administrative spending and payouts to local governments that were planned for September-November.
The opposition-controlled upper house of parliament has shown no movement toward enacting a deficit-bond bill — needed to implement about 40 percent of the annual budget's 90.3 trillion yen in spending — before the current session ends on Saturday.
The opposition has ratcheted up pressure for an early general election in exchange for passage of the funding bill, although Prime Minister Yoshihiko Noda has remained coy, simply reiterated his promise to call a poll “soon.”
Several investors and lawmakers have said the most likely outcome would be passage of the bill in October, when an extraordinary parliament session is expected to be convened, with Noda setting an election date at that time in exchange.
Last year, a similar deadlock was resolved when then-Prime Minister Naoto Kan stepped down in August after months of brinksmanship over his vague promise to resign.
The specter has emerged, however, of a Japanese “fiscal cliff” of economically damaging spending cuts, heightening investor worries over a protracted delay to the deficit-bond bill, although financial markets have so far shown little reaction.
Further spending deferrals could be considered in October if the bill remains deadlocked, Azumi said, while the government will do its utmost to avert a shutdown like those that have threatened the U.S. government.
“That could significantly affect the livelihoods of the people and economic activity,” Azumi told reporters after a Friday morning cabinet meeting.
“I want the ruling and opposition parties to consult with each other and swiftly enact the bill at an extraordinary parliament session,” he added.
Azumi said his ministry was not currently planning to issue short-term financing bills as a stopgap measure to tide the government over in the event the deficit-bond bill remains deadlocked.
The bill cleared the lower house last month, but it has been blocked in the opposition-controlled upper chamber.
The upper house passed a censure motion against Noda last month, piling more pressure on him to make good on his promise for a general election.
Under the contingency plan for delayed spending, government bond redemptions and interest payments on outstanding debt will be made in full using reserves set aside specifically for that purpose, finance ministry officials said.
But all state spending will be targeted to some extent, except for essential public services such as police, national security and disaster relief.
Subsidies to administrative agencies and national and private universities, as well as government administrative expenditures, will be slashed by more than half from the amount earmarked in the annual budget, until the deficit-bond bill's passage is secured.