Japan to Spend 4.8 Trillion Yen in 2nd Extra Budget This Year

By Keiko Ujikane and Toru Fujioka

Dec. 20 (Bloomberg) -- Japan will spend 4.8 trillion yen ($54 billion) in its second supplementary budget for fiscal 2008 to help households and small businesses, and make up for a shortfall in tax revenue.

The second extra budget for the year to March 31 will be used to raise 4.8 trillion yen for economic stimulus measures, including spending in financial assistance for families and subsidies to local authorities, according to a proposal released by the ministry in Tokyo today.

The budget also includes other expenditures, such as international contributions, and the size of the total spending in the budget is squeezed by steps such as cost-cutting.

The government will use the budget to plug a 7.1 trillion yen of shortfall in tax revenue, the ministry said.

The extra spending will be financed by issuing 7.4 trillion yen worth of bonds and tapping so-called special accounts, bureaucrat-run funds set aside from the regular national budget, the ministry said.

Japan’s supplementary budget provides funds for spending above that foreseen in the initial budget for the year ending March 31 passed by the parliament earlier this year.

The finance ministry submitted the extra budget proposal to the Cabinet today along with a budget proposal for the next fiscal year.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net