Japan 2016 budget clears parliament

14_Japan 2016 budget clears parliament

By Tetsushi Kajimoto
(Australian Associated Press)

Japan’s parliament has approved a record 96.72 trillion yen ($A1.13 trillion) state budget for fiscal 2016.

The mechanism paves the way for a fully-fledged debate on additional stimulus spending to spur the flagging economy.

Prime Minister Shinzo Abe wants to front-load spending in the annual budget for the coming fiscal year starting in April and to adopt a fresh extra budget, while speculation is rife he may again delay a sales tax increase planned for April 2017.

The budget was given final approval by the upper house of parliament on Tuesday, with the ruling bloc’s firm majority.

“We need to quickly implement this budget. I’ll instruct the finance minister to front-load spending where possible,” Abe told reporters.

Abe needs to strike a delicate balance between conflicting needs to curb the industrial world’s heaviest public debt burden and to revive an economy teetering close to recession.

The government raised its initial budget spending estimate by about 400 billion yen for fiscal year 2016 from 96.3 trillion yen in 2015.

But sources say the government already has begun considering a tax-hike delay and more fiscal stimulus, with people around Abe calling for additional spending of 5 trillion to 10 trillion yen to stimulate consumption.

Abe is expected to decide on the sales tax and stimulus spending around a May 26-27 Group of Seven summit he will host, after analysing first-quarter GDP data due earlier that month.

Most economists expect a return to growth in the first quarter, albeit at very modest levels but data released so far this year has been generally weak.

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