The Nikkei business daily reported that Japanese government plans to issue JPY 10 trillion in reconstruction bonds and cut spending by JPY 3 trillion to pay for more projects to rebuild the devastated northeast.
Investors are counting on reconstruction spending to help Japan pull out from a slump caused by a massive earthquake and tsunami in March and to resume moderate growth in the third quarter.
A government source told Reuters last week that it was planning additional spending of JPY 13 trillion for reconstruction projects, on top of a combined JPY 6 trillion already set aside in two extra budgets.
The source had said that the government was considering issuing special bonds, scaling back other spending plans and selling national assets. The Ministry of Finance was planning on five year bonds, with the government considering raising taxes to repay them.
The Nikkei said about JPY 8 to JPY 9 trillion of the JPY 13 trillion would be spent to improve infrastructure, while JPY 3 trillion would go towards building schools and creating jobs.
The draft blueprints for the government''s reconstruction projects will be finalized this month by a reconstruction task force headed by Prime Minister Mr Naoto Kan.
( Source: www.steelguru.com )