Japan to hold extra parliament session from Oct 29 to tackle deficit

Reuters News
Posted: Oct 19, 2012 7:08 AM
Japan to hold extra parliament session from Oct 29 to tackle deficit

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan's ruling party convened an extra session of parliament from October 29 to try to pass a bill needed to cover nearly half the budget spending, setting the stage for another showdown with the opposition seeking early elections.

The move comes after Prime Minister Yoshihiko Noda failed to win opposition support for the bill following his refusal to clarify the timing of an early election he had promised back in August.

Opinion polls show the ruling Democrats trailing their opposition rivals who are trying to force Noda to make good on his promise by threatening to block legislation in the upper house where opposition parties have majority.

"We will convene an extra parliament session on the (October) 29th. The session will run for about a month," the Democrats' Acting Secretary-General Jun Azumi told reporters.

Without the deficit bond bill needed to finance about 40 percent of the budget for the current fiscal year to end of March 2013, the government says it may run out of money by the end of November, which could cause a "fiscal cliff" of draconian spending cuts and push the economy back into recession.

The prospect has drawn close scrutiny from ratings agencies Moody's Investors Service and Standard & Poor's, which warned of signs of some stress in government funding conditions.

But opposition parties are withholding their support due to Noda's reluctance to set a date for a promised election.

"They told me to clarify the specific timing of elections. Without it they said they would not proceed with discussions any further," Noda told reporters after a meeting with leaders of main opposition parties.

"It is not my intention to prolong the life of my government. (But) I'd like to make my own judgment when conditions are set."

Policy-making has been deadlocked since Japan's regular parliament session ended last month.

Noda promised to call an early election in return for opposition backing for his signature plan to raise the sales tax. He has been coy on the exact timing but it is expected to be between November and early next year.

But Jeffrey Kingston, director of Asian studies at Temple University's Japan campus said, however, an election before the end of the year was looking increasingly unlikely.

"Noda has no incentive to call an election any time soon," he said, noting the Democrats' rock bottom support ratings.

(Additional reporting by Linda Sieg and Kaori Kaneko; Editing by Jeremy Laurence)