TOKYO (Reuters) – Japan Innovation Party has agreed with Prime Minister Shigeru Ishiba’s party and coalition partner to support revisions to the 115 trillion yen ($769.59 billion) state budget plan for the new fiscal year from April, a party chief said on Tuesday.
Japan Innovation Party’s decision to support the revised budget would clear the way for its passage in parliament’s lower house before the new year starts, after Ishiba’s coalition agreed to yield to demands from the opposition party.
A revision would mark the first time since 1996 that the government would be forced to change its initial budget allocation, highlighting the diminished political influence of Ishiba’s Liberal Democratic Party and partner Komeito after they lost a parliamentary majority following the October elections.
The scale of revision, however, could be small enough to avoid a major change to the planned new bond issuance of 28.6 trillion yen ($190.72 billion), which would be the lowest level since 2008, analysts say.
The prospect of parliament passing the budget to the new bond issuance plan would provide relief to the bond market, which has been rattled by a recent surge in Japanese government bond (JGB) yields.
($1 = 149.4300 yen)
(Reporting by Makiko Yamazaki and Satoshi Sugiyama; Editing by Christian Schmollinger and Ed Osmond)
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