The Straits Times
Published on Sep 07, 2012

Japan cuts $78b in spending, warns reserves may dry up by November


TOKYO (AFP) - Japan said on Friday it would suspend 5.0 trillion yen (S$78 billion) in spending as a political row has left the government facing a severe cash crunch that could see it run out of money within months.

Officials warned there would not be enough in its coffers to cover expenses as political gridlock ties up the passage of a bond-issuance bill needed to help pay for some 40 per cent of Tokyo's spending in the fiscal year to March.

Finance Minister Jun Azumi warned that public reserves would "mostly dry up at the end of November" if the opposition-led stalemate continued, with the current parliament due to end on Saturday. They are expected to restart in October.

"There is a high possibility that we will have to make further delays in November," Mr Azumi told a regular news conference on Friday, as he called on lawmakers to approve the bill.