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Japan's Azumi: govt could run out of cash by Oct
TOKYO (Reuters) - Japan's government could run out of money to fund this fiscal year's budget by the end of October, the finance minister said, as a standoff in parliament over a deficit financing bill threatens to wreak havoc with the country's finances.
The deficit financing bill, which would allow the government to sell bonds needed to fund almost half of the budget, has languished in parliament as the ruling Democratic Party tussles with opposition parties that can use their control of the upper house to reject legislation.
The finance minister issued a plea on Friday to the two largest opposition parties to pass the bill, because without it government spending would grind to a halt, the economy would be put into jeopardy and Japan's standing among credit ratings agencies could suffer.
"I really hope that we can get a multi-partisan agreement on the deficit bill," Finance Minister Jun Azumi said.
"It doesn't matter which party is in power. Without this bill, the budget will collapse."
Japan's budget for the current fiscal year that started in April totals 90.3 trillion yen.
The deficit financing bill allows Japan to sell 38.3 trillion yen in government bonds to fund the budget. The remainder is funded by tax revenue, non-tax revenue and income from bonds earmarked for public works projects.
Government expenditure is forecast to reach 43.9 trillion yen by the end of September, Azumi said.
Assuming that the deficit financing bill does not pass, the government would have only 46.1 trillion yen on hand, Azumi said. This means the government is sure to run out of money by the end of October, he said.
The Finance Ministry could start cutting tax grants to local governments in September if there is no sign that the deficit financing bill will pass, Azumi said.
Japan already has the world's largest debt burden at nearly twice the size of its $5 trillion economy, and a breakdown in fiscal spending could increase skepticism that politicians are losing their grip on public finances.
The ruling Democratic Party struck a deal last month with the Liberal Democratic Party and the New Komeito, the two largest opposition parties, to pass bills that will double the 5 percent sales tax to pay for welfare spending.
However, further cooperation between the three parties has been elusive as rebel lawmakers have broken away from the Democrats, threatening a larger political reshuffle.
(Editing by Joseph Radford and Eric Meijer)
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