Tokyo (AFP) April 16, 2011
Japan is considering issuing special bonds to fund reconstruction following last month's massive earthquake and tsunami, and imposing a new tax to repay the debt, a report said Saturday.
The new bonds would be used to finance the rebuilding of infrastructure, creating jobs and supporting local businesses, the Nikkei newspaper reported without citing sources.
Prime Minister Naoto Kan's embattled government has already said it is eyeing an initial budget of more than four trillion yen ($48 billion) to finance the first wave of reconstruction in Japan's devastated northeast.
The total cost from collapsed or damaged houses, factories and infrastructure such as roads and bridges is estimated at 16-25 trillion yen over the next three fiscal years, according to the Cabinet Office.
The upper estimate would put the disaster's financial impact at more than double the 9.6 trillion yen of the 1995 Kobe earthquake, which killed more than 6,400 people.
However, any new borrowing is likely to prove controversial in Japan, which already has the highest debt levels anywhere in the industrialised world, at around 200 percent of GDP.
The new debt could be repaid though an increase in either income or consumption tax, the report said.
Money raised from the special "disaster bonds" would be restricted to financing the recovery, and could not be used for any other purpose, it said.
earlier related report
Accompanied by a slump in consumer spending, the disasters have led the Treasury to downgrade growth from the 3.25 percent flagged in November's budget update to 2.25 percent, said The Age newspaper, citing an internal memo.
The devastation and nuclear crisis in key trading partner Japan wiped 0.25 percent from economic growth, according to the memo, with Australia's summer of floods and cyclones delivering a 0.5 percent hit.
Australia's currency, which has experienced a record-breaking run above parity with the greenback in recent weeks, was also stronger than had been anticipated, impacting exporters and import-competing industries.
"With already patchy growth in some sectors, the impact could lead to flat or even negative growth in the March quarter, although there is likely to be a rebound in the June quarter," the memo said.
The 1.0 percent growth downgrade translated to Aus$13 billion in damage, The Age said, increasing pressure on Treasurer Wayne Swan to deliver deep spending cuts in next month's national budget.
Swan has already flagged an austere and potentially unpopular budget due to the floods, Australia's costliest natural disaster, with reduced revenues but growing costs.
"These are impacts in the short term and there's no doubt there will be an impact on the budget bottom line this year," the ABC reported Swan as saying Saturday.
"But as we go into the forward estimates, as we go into the years ahead, growth will be strong. Short-term weakness, medium-term strength."
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Japanese police on Thursday found the bodies of 10 tsunami victims in the first search of a 10-kilometre (six-mile) zone around an atomic plant, as emergency crews battled to contain a nuclear crisis. Hundreds of police wearing white protective suits and face masks scoured rubble-strewn neighbourhoods near the plant for victims of the giant wave that smashed into Japan's northeast coast more ... read more
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