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Japan Plans Post-Quake Spending Bill as Fiscal Risk Rises

March 13, 2011, 4:26 AM EDT
By Christopher Anstey


March 13 (Bloomberg) -- Japan aims to compile a package to fund the rebuilding effort after its strongest earthquake on record, a step that may worsen the challenge of reining in the world’s biggest public debt.

The northern Tohoku region most affected by the disaster accounts for about 8 percent of gross domestic product, and is host to factories making products from cars to beer. It also has energy infrastructure including a nuclear power plant that the government said is at risk of a meltdown after an explosion.

Factory shutdowns, power cuts and the impact on consumer confidence may hurt Japan’s GDP for a period of months, while contributing to growth later as reconstruction occurs, economists said. The additional public spending risks hurting demand for Japanese government bonds, said analyst Alicia Ogawa.

Policy makers will need to compile a spending package “over the medium to long-term” to cope with the aftermath of the 8.9-magnitude earthquake and the tsunami it triggered, Chief Cabinet Secretary Yukio Edano told NHK Television. Officials will use about 200 billion yen ($2.4 billion) left over from the budget for the fiscal year ending March 31 to pay for the recovery effort, he said, adding that local elections scheduled for next month may be delayed.


More at: http://www.businessweek.com/news/2011-03-13/japan-plans-post-quake-spending-bill-as-fiscal-risk-rises.html



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