December 26, 2007	Wednesday	Zilhaj 15, 1428

TOKYO, Dec 25: Japan will spend 215 billion yen ($1.9 billion) on a package of measures to ease the pain felt by the public from high oil prices, which includes cutting expressway tolls and boosting financing help for small firms.

The amount is seen increasing further as it does not include costs to subside home heating oil in cold areas, suggesting that government efforts to rein in a burgeoning fiscal deficit are stalling.

The government will set aside 43 billion yen under the supplementary budget for fiscal 2007-08 and another 172 billion yen under the state budget for next fiscal year for the package, formalised at a meeting of cabinet ministers on Tuesday.

“There is nothing good about rising crude oil prices for Japan’s economy,” with the damage being felt broadly among companies and households, Economics Minister Hiroko Ota told a news conference.

“We took steps focusing on areas that are most hard hit,” she said.

Items on the spending list are increases in financing support for small firms hit by rising costs, cuts in late night expressway tolls to help truck drivers and subsidies to sustain bus and plane transportation at remote areas.

The move reflects growing pressure among ruling Liberal Democratic Party lawmakers to boost government spending to win back support in rural areas after the party’s defeat in an upper house election in July.

The central government will also foot half the bill for local governments that provide heating oil allowances to citizens on low incomes.

Four prefectures in northern Japan already plan or have expressed interest in providing subsidies, one being Hokkaido where temperatures fall as low as -20 Celsius (-4 F) in December.

Japan has had austere state budgets in the past few years as the government sought to keep public debt from rising further.

Even so, outstanding public debt is expected to increase to around 776 trillion yen by the end of next fiscal year, roughly 147 per cent of gross domestic product — the highest among leading industrialised countries.

The budget for next fiscal year, the first budget under Prime Minister Yasuo Fukuda, projected general expenditures to total 47.28 trillion yen, a slight increase from this year, in a possible retreat from fiscal reform efforts.

Consumer price data shows oil prices in Japan rose 2.3 per cent in October from a year earlier. Gasoline prices jumped 3.0 per cent, offsetting price falls for other items to push up the core consumer price index by 0.1 per cent during the month.

Some economists say the rises, if sustained, could hurt already soft personal consumption, which makes up over half of Japan’s economy.—Reuters