Japan's parliament Wednesday passed a slimmed-down budget for fiscal 2002, giving the prime minister a leg up in his effort to curb the government's profligate spending. The $610 billion spending measure is smaller than last year's.
Japan's new budget, enacted by the Japanese Diet Wednesday, is an exercise in restraint. It trims general spending by a record 2.3 percent from last year in an effort to slow the growth of the country's enormous public debt.
Years of heavy spending on public works projects, such as roads and bridges, have left Japan with a public debt that exceeds the country's annual gross domestic product and is bigger than that of any other industrialized nation.
While previous Japanese governments spent heavily to try to kickstart the economy, the strategy failed. Japanese Prime Minister Junichiro Koizumi is now trying to rein in expenditures in line with his twin pledges to restore the country's economic health and to maintain limits on government borrowing.
Mr. Koizumi says that "the government wants to prevent deflation and revitalize the economy." He says that "he is aiming to carry out structural reforms to allay fears of a financial crisis."
This is the second year in a row that the government has reduced the size of the budget, although in 2001 it issued two supplementary spending packages as unemployment soared to record levels and signs of a deflationary spiral emerged.
The passage of the 2002 budget was expected because of the ruling coalition's majority in parliament. The move clears the way for politicians to begin debating the possibility of tax cuts to lift the economy. The government is considering reductions in both corporate and personal tax rates, though it is also looking at new collection methods to discourage tax evasion.
The budget will take effect on Monday, the first business day of the new fiscal year.