World Bulletin / News Desk
Japan's government could run out of money by the end of November, the finance minister warned, even after an emergency spending deferral to cope with opposition parties' obstruction of an expenditure-enabling bill, raising the stakes in wrangling over the timing of a general election.
Jun Azumi warned the opposition that further delays could threaten the economy's recovery from last year's earthquake and that the unprecedented 5 trillion yen ($63.3 billion) spending delay would give the government only limited breathing room.
Although Japan's feuding political parties are widely expected to reach some sort of compromise to avert a government shutdown, the standoff has forced a shelving of administrative spending and payouts to local governments that were planned for September-November.
The opposition-controlled upper house of parliament has shown no movement toward enacting a deficit-bond bill -- needed to implement about 40 percent of the annual budget's 90.3 trillion yen in spending -- before the current session ends on Saturday.
The opposition has ratcheted up pressure for an early general election in exchange for passage of the funding bill, although Prime Minister Yoshihiko Noda has remained coy, simply reiterated his promise to call a poll "soon".
Several investors and lawmakers have said the most likely outcome would be passage of the bill in October, when an extraordinary parliament session is expected to be convened, with Noda setting an election date at that time in exchange.
Last year, a similar deadlock was resolved when then-Prime Minister Naoto Kan stepped down in August after months of brinksmanship over his vague promise to resign.
The spectre has emerged, however, of a Japanese "fiscal cliff" of economically damaging spending cuts, heightening investor worries over a protracted delay to the deficit-bond bill, although financial markets have so far shown little reaction.
Further spending deferrals could be considered in October if the bill remains deadlocked, Azumi said, while the government will do its utmost to avert a shutdown like those that have threatened the U.S. government.
"That could significantly affect the livelihoods of the people and economic activity," Azumi told reporters after a Friday morning cabinet meeting.
"I want the ruling and opposition parties to consult with each other and swiftly enact the bill at an extraordinary parliament session," he added.
Azumi said his ministry was not currently planning to issue short-term financing bills as a stopgap measure to tide the government over in the event the deficit-bond bill remains deadlocked.
The bill cleared the lower house last month, but it has been blocked in the opposition-controlled upper chamber.
The upper house passed a censure motion against Noda last month, piling more pressure on him to make good on his promise for a general election.
Under the contingency plan for delayed spending, government bond redemptions and interest payments on outstanding debt will be made in full using reserves set aside specifically for that purpose, finance ministry officials said.
But all state spending will be targeted to some extent, except for essential public services such as police, national security and disaster relief.
Subsidies to administrative agencies and national and private universities, as well as government administrative expenditures, will be slashed by more than half from the amount earmarked in the annual budget, un t il the deficit-bond bill's passage is secured.
($1 = 78.97 Japanese yen)
Exit would cost average monthly salary for each household, Organization for Economic Cooperation and Development says
Firms to see deterioration in credit metrics as low oil prices impact cash flows
OPEC exporters as well as other non-OPEC producers, including Russia, fail to agree on oil output freeze
Moody's has upgraded Argentina's credit rating after a US appeals court ruling this week cleared the way for Buenos Aires to proceed with the biggest debt issue by an emerging market country in 20 years.
Ahead of Doha meeting, OPEC says 'hurdles prevail as oversupply persists and inventories remain high'
Kuwaiti OPEC head says Russia and OPEC are likely to agree on oil output freeze
'The good news is that the recovery continues; we have growth; we are not in crisis,' Christine Lagarde says
The meeting is a 'follow-up' to last month's talks between Qatar, Russia, Saudi Arabia and Venezuela when they proposed an accord to freeze oil output at January levels
'They are not trimming output, only keeping it at the same levels...this is the same unchanged policy,' one expert says
Iran joining Venezuela, Saudi Arabia, Qatar and Russia in freezing oil output levels
According to the ratings agency Moody’s, Iran is fiscally and structurally well placed to come back into the global economic scene
PM Davutoglu meets the heads of the world's largest companies as he promotes Turkish economic interests at World Economic Forum
Fund cuts global growth forecasts for both 2016 and 2017 by 0.2 percentage points
'Runaway inequality has created a world where 62 people own as much wealth as the poorest half of the world’s population'