Bloomberg News

Japan DPJ Reaches Preliminary Deficit Bond Deal With Opposition

November 12, 2012

The ruling Democratic Party of Japan reached a preliminary deal with the two main opposition parties on legislation to fund the rest of this year’s budget.

The agreement calls for revising spending plans for the current fiscal year ending in March that will allow for restricting deficit bond issuances, according to a draft given to reporters in Tokyo. It also calls for extending the authorization of bond issuances to three years instead of one.

“I still have to take this back and discuss it, but it is a forward-looking plan that takes into account what we have emphasized,” Akira Amari, policy chief for the main opposition Liberal Democratic Party, told reporters today after meeting with DPJ counterpart Goshi Hosono. “I have confidence the contents will be welcomed within our party.”

Prime Minister Yoshihiko Noda has refused to heed opposition calls to say when he will fulfill an August pledge to hold elections “soon” until the deficit financing bill is passed. Finance Minister Koriki Jojima has said the government will run out of money by the end of the month without the legislation, hampering efforts to boost an economy that shrank last quarter.

Noda’s support is plummeting ahead of parliamentary elections that must be held by August, increasing the possibility of a seventh Japanese prime minster since 2006.

He reiterated today that he has no intention of revealing when he will announce a date for the election, and that three conditions must be fulfilled before he does. The provisions include passage of the deficit bond bill, passage of legislation to address disparities in the electoral system, and the establishment of a framework to revise social security.

Gross domestic product fell an annualized 3.5 percent in the third quarter of the year, the most since the March 2011 record earthquake and tsunami, a government report today showed.

Support for Noda’s cabinet fell 11.5 percentage points to 17.7 percent, the lowest since he took office in September 2011, according to a Kyodo News poll published Nov. 5. Support for the DPJ was 12.1 percent compared with 27.7 percent for the LDP.

To contact the reporters on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net; Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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