Japan: Political gridlock can hit economy

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Japan: Political gridlock can hit economy

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Finance Minister Jun Azumi has warned the country could run out of money in a matter of months.

31 August,2012 11:35 am

Political gridlock in Japan over a bond bill could force the government to delay spending, which would deal another blow to the fragile economy as well as under-pressure Prime Minister Yoshihiko Noda.Tokyo is facing a cash crunch, with parliament yet to pass a law that would let the government issue bonds to cover about 40 percent of its spending plans for the year to March and the finance minister has warned the country could run out of money in a matter of months.We will consider postponing the implementation (of spending) to delay the depletion of financial resources, Jun Azumi told a regular press briefing in Tokyo Friday, according to Dow Jones Newswires.This is not fiction but a real story, he added.If the bill is not passed by September 8, the end of the parliamentary session, the government will have to order spending suspensions at government-linked firms and state universities, while also slimming administrative expenses.Azumi also said the ministry would likely delay the payment next week of tax grants to municipalities worth about 4.1 trillion yen ($52.3 billion). Any delay in spending would weigh on the economy, which is slowly recovering from the effects of last yearsearthquake-tsunami and is being supported by government measures to prop up demand.However, in response to questions about whether Japan was in danger of defaulting on its mountain of public debt, Azumi said I want to send out a clear message to the rest of the world that Japan will meet its obligations.The latest test comes after the opposition-controlled upper house slapped Prime Minister Yoshihiko Noda with a censure motion, heaping pressure on him to call snap elections.The non-binding motion, a symbolic wrist slap signalling the oppositions refusal to work with Nodas cabinet, threatened to gridlock the passage of any new law including the bond bill. Its not good politics when you aim to achieve something by taking this bill hostage, Azumi said Friday.Japan has an eye-watering national debt that amounts to more than twice its gross domestic product -- the highest among industrialised nations, with the costs of a rapidly ageing population heaping pressure on public coffers.Legislators passed a bill earlier this year to double Japans sales tax to 10 percent by 2015 in a bid to help deal with rising public expenses.