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Japan's $ 94 billion reserve to combat pandemic sparks ire as PM Abe's 'pocket money"

June 12, 2020, 02.00 PM | Source: Reuters
Japan's $ 94 billion reserve to combat pandemic sparks ire as PM Abe's 'pocket money

ILUSTRASI. Japan's Prime Minister Shinzo Abe


Japan typically sets aside reserves of around several hundred billion yen in the annual budget, largely to meet disaster relief and other unexpected costs.

The government has discretion on how to use the money and needs to report to parliament only after the funds are tapped.

Such reserves are usually kept small because it is an exception to a constitutional rule that requires budgetary spending to receive prior approval by parliament.

Japan has struggled to rein in spending even in good times and is now saddled with the biggest debt among industrialised nations that is twice the size of its US$ 5 trillion economy.

Read Also: IMF says $10 trillion spent to combat pandemic, far more needed

The huge reserve - more than five times the 1.72 trillion yen deployed after the 2011 earthquake and tsunami - has sparked concern that the size could become the norm, rather than an exception.

Finance Minister Taro Aso rebuffed the idea of compiling a third extra budget, saying it was premature to discuss it.

"We first have to see how the measures we've taken so far affect the economy," he said.

Opposition lawmaker Toranosuke Katayama, a former ruling party heavyweight and among Japan's longest-serving politicians, scolded Abe in parliament over what he saw as breaching the boundaries of parliamentary democracy.

"Budget needs prior parliament approval. That is a core principle of Japan's constitution. What you're doing could violate this principle," he said.

"Even when you're making exceptions, you need to set a limit. Otherwise 10 trillion yen could easily turn into 12 trillion yen. That's what I'm worried about."

Editor: Anna Suci Perwitasari
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