Thursday, March 31, 2011

Japan passes record budget, but deadlock remains

The Japanese parliament Tuesday passed a record $1.1-trillion budget for the year starting April but faced deadlock over key funding bills needed to put much of it into action.

The impasse is fuelling worries over an economy reeling from a record earthquake and tsunami that tore into Japan's northeastern coast on March 11.

The 92.4-trillion-yen budget, formulated before the disasters, was enacted after the government-controlled lower house of parliament overrode an earlier veto by the opposition-controlled upper house.

Under the constitution, the annual budget must be enacted within 30 days of being sent to the upper house after the lower house's approval, even if the upper house rejects it. The lower house voted for it on March 1.

But Prime Minister Naoto Kan's Democratic Party of Japan (DPJ) needs opposition support to pass key legislation, including approval to issue deficit-covering bonds to fund 42 percent of planned spending.

Designed to boost the pre-quake economy, the budget also threatens to add to Japan's debt pile, which at nearly 200 percent of GDP is the industrialised world's biggest. (read more)