Japanese lawmakers have moved closer to fixing the nation’s own “fiscal cliff”, agreeing to pass a bond bill crucial to financing a huge chunk of this year’s public spending, a report said Thursday.
The reported deal comes after Prime Minister Yoshihiko Noda last month warned large parts of Japanese public life would grind to a halt unless a deadlock was broken on the bill to let Tokyo issue new bonds to cover about 40 percent of its budget spending in the year to March.
The opposition had refused to green light the bill until Noda gave a specific timeline for calling elections.
Japan’s Jiji Press news agency reported Thursday that the opposition and lawmakers in the ruling Democratic Party of Japan had reached a deal to pass the bill in the lower house of parliament late next week.
But it remained unclear whether the bill would pass in the opposition-controlled upper house.
The report comes after global markets slumped in the wake of President Barack Obama’s re-election, which raised the fears US lawmakers will not be able to agree on a deal to avoid a so-called fiscal cliff, a combination of deep spending cuts and huge tax hikes that takes effect on January 1.
There are growing fears that the package will kick in and reverse the US economic recovery, tipping the country back into recession and dealing a major blow to the global economy.
Tokyo has not been forced to halt budgetary spending due to a funding shortage since the end of World War II.
Noda is under pressure after spending a lot of his political capital over the summer forcing through a bill on doubling the nation’s sales tax — in part to begin closing Japan’s yawning debt hole.
The country relies heavily on borrowing to finance its regular spending, creating an ever-worsening public debt problem.
The International Monetary Fund says Japan will owe the equivalent of 245 percent of its approximately $5 trillion gross domestic product next year, the highest among industrialised nations.
Tokyo moves to fix Japan's 'fiscal cliff': report
