(MENAFN- Arab Times) TOKYO March 13 (AFP): Japan's powerful lower house of parliament on Friday passed a record $793 billion budget including fresh economy-boosting stimulus and more defence spending as Tokyo eyes an increasingly assertive China.
The government plans to spend 96.34 trillion yen for the fiscal year to March 2016 under the budget which will now be sent to the upper house for final approval. Passage is expected within several weeks despite possible opposition moves to stall the bill. Tokyo's spending package is aimed at reversing an expected 0.5 percent contraction in the world's number three economy for the current fiscal year that ends this month. But the eye-popping budget will also inflate a huge national debt that is already twice the size of the economy one of the biggest burdens among wealthy nations. Among the spending is 5.97 trillion yen for public works while other funds will pay for programmes such as child-care and medical assistance which are aimed at luring more women into the workforce a key part of Prime Minister Shinzo Abe's bid to stimulate the long-tepid economy dubbed Abenomics. Japan's defence spending will also set a record at 4.98 trillion yen as the hawkish Abe looks to strengthen surveillance of territorial waters amid ongoing diplomatic battles with Beijing over the ownership of islands in the East China Sea. Almost one-third of the budget is for social security programmes estimated to cost a record 31.53 trillion yen up 3.3 percent from the fiscal 2014 budget and underscoring how Japan's rapidly ageing population is straining the public purse. One quarter of the package will cover Tokyo's debt-servicing costs with plans to issue fresh bonds worth 36.9 trillion yen to help pay for the increased spending. Meanwhile meetings of the US Federal Reserve and Bank of Japan will be key trading cues for Tokyo investors next week after the Nikkei broke the 19000 level on Friday for the first time in 15 years. Action Few expect policy action from either central bank but investors are keen to see if the Fed offers more clues about an expected interest rate hike later this year which has pushed up the dollar against the yen amongst other currencies. 'The market will focus on the Fed next week' said Yoshihiro Okumura general manager at Chibagin Asset Management. 'We haven't seen any clear signs of an earlier-than-expected rate hike but the market remains quite nervous about the US stance on monetary policy.' Markets will also be looking to comments from BoJ chief Haruhiko Kuroda to see if further monetary easing measures are in store to boost the flagging economy. Some analysts say the Nikkei will keep marching closer to the 20000 level lifted by the positive impact of a weak yen on Japanese exporters and an expected pick up in consumer spending. 'There may be some adjustment in the market but the current buying sentiment is likely to stay strong for the time being' Okumura said. On Friday the Nikkei 225 at the Tokyo Stock Exchange ended above 19000 points for the first time since 2000 as foreign investors pile into Japanese shares and the country's public pension fund the world's biggest steers more of its bond-heavy portfolio into stocks. The benchmark index rose 1.39 percent or 263.14 points to close at 19254.25. Over the week the Nikkei rose 1.49 percent. The broader Topix index of all first-section shares added 0.89 percent or 13.70 points to end at 1560.33. It rose 1.26 percent over the past week. Factory robotics giant Fanuc led the Tokyo market higher as it soared 13.20 percent to 26870.0 yen ($221) on Friday. The spike came as Japan's leading Nikkei business daily published an interview in which the firm's boss said he was eyeing ways to boost shareholder returns and said the company long known for its secrecy would set up an investor relations department. That comes fewer than two months after US hedge fund Third Point said it had invested in Fanuc and planned to push for change noting the firm was sitting on $8.5 billion in cash and had no debt. Buying sentiment in Tokyo was also lifted by a surge on Wall Street while in forex markets the dollar rose to 121.45 yen up from 121.29 yen in New York. The greenback's ascent against the yen is generally good for major exporters as it makes them more competitive overseas and inflates the value of their repatriated profits. Panasonic shares rose 0.13 percent to 1528.5 yen Toshiba gained 0.57 percent to 479.1 yen and Uniqlo clothing chain operator Fast Retailing jumped 1.67 percent to 46275.0 yen.
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