Cabinet approves extra budget to finance stimulus plan

AFP - The Japanese cabinet on Saturday approved a 4.8 trillion yen (54 billion dollar) second extra budget to finance a massive stimulus package, government officials said.  

Prime Minister Taro Aso's cabinet plans to submit the budget, for the year to March 2009, to parliament early next year, the officials said.  

The budget, exceeding the 1.81 trillion yen first supplementary budget, is intended to fund cash handouts, a job-creation scheme and other economic measures in the 26.9-trillion-yen stimulus package unveiled in October.

Separately, the finance ministry announced a draft state budget reaching an all-time high of 88.5 trillion yen for the year to March 2010, giving up its belt-tightening policy amid the global financial crisis.

"I would like to compile an audacious and practical budget aimed at recovering the economy and securing people's life," Aso said in a statement.

The total amount of national bonds issued in the 2009-2010 financial year will reach 33.3 trillion yen, marking the first rise in four years.

"The rapid deterioration of the economy is far beyond our projections," Finance Minister Shoichi Nakagawa told a news conference. "It is our important task to take flexible measures for the people and the economy."

The government plans to adopt the draft budget on Wednesday following minor revisions. It will then be submitted to parliament in January.

The Japanese government on Friday forecast zero growth for the year to March 2010, battling to stave off a prolonged contraction in the world's second-largest economy.

It was Japan's first zero growth forecast in real terms in seven years as Asia's largest economy is battered by slowing demand overseas for its exports and a slump in domestic demand.

The global economic crisis has plunged Japan into recession in the current year to March 2009, despite earlier government projections of growth.