Japan unveiled a record 92.29 trillion yen ($1 trillion) budget Friday for the next fiscal year, reflecting the prime minister's campaign pledge to boost spending for child support and slash wasteful outlay for public works. The budget for the year starting in April 2010 came as Japan's economy - the world's second-largest - struggled to shake off its worst recession since World War II amid deflation. “This budget is to protect lives. I made all my efforts to secure budgets to support child-rearing, employment, the environment and welfare,” Prime Minister Yukio Hatoyama told a news conference after his Cabinet approved the budget. “I will do my best to avoid a double-dip recession,” Hatoyama told a news conference. Hatoyama, who marked his first 100 days in office this week, has moved to slash what his party deems to be wasteful public spending and redirect money to struggling households. His budget plan will pile further pressure on Japan's ailing public finances. The government will issue new bonds worth a record 44.3 trillion yen to cover the spending plans. The Organization for Economic Cooperation and Development has warned that Japan's public debt is set to soar to more than 200 percent of gross domestic product by 2011. “Rising debt is worrisome for Japan,” said Okasan Securities equity strategist Hirokazu Fujiki. “With the new government, only the allocation of resources has changed and that hasn't prevented debt from rising further.” Japan's economy grew in April-June for the first time in five quarters on rebounding exports and government stimulus measures, but stubborn deflation and a weak job market are seen as a threat to the recovery. The unemployment rate climbed to 5.2 percent in November from 5.1 percent in October, worsening for the first time in four months, the government said. Core consumer prices fell 1.7 percent in November from a year earlier, the ninth straight month of drops, fanning worries that deflation could jeopardize a fragile recovery from the worst recession in decades. Last week Japan's central bank said it was a “critical challenge” for Asia's biggest economy to overcome deflation, which hurts companies and encourages consumers to put off purchases. The jobless rate was a record 5.7 percent in July. Spending on social welfare, which includes expenditures of monthly child allowances - one of Hatoyama's key election promises - will jump by 10 percent from the initial budget of the current fiscal year to 27.3 trillion yen, a Finance Ministry official said. The government will start giving families 13,000 yen a month per child through junior high from April 2010 to help ease child-rearing costs and encourage more women have babies. Japan has the lowest percentage of children among 31 major countries, trailing Germany and Italy, according to a government report. In contrast, the nation's elderly population is swelling. Hatoyama, who came to power in September after a historic electoral victory in August, had also vowed during the election campaign to cut wasteful spending on public works. His budget proposal earmarked 5.77 trillion yen in public works spending, down a record 18 percent from the initial budget of the current fiscal year, the Finance Ministry official said. Hatoyama said his government will shift spending “from concrete to humans” with an increase in spending on education. His budget includes making all public high schools tuition-free from April 2010. Currently there are about 2.48 million students in public high schools - grades 10 through 12 in Japan - and they pay a nominal fee to attend. The government will issue 44 trillion yen in bonds to cover a drop in tax revenue due to the prolonged economic slump, Hatoyama said. The budget must be cleared by the parliament early next year to take effect.
