Tokyo - Prime Minister Taro Aso's administration on Wednesday approved a record cap of 52.67 trillion yen (548.5 billion dollars) in general spending for the next fiscal year, which begins in April, as Japan battles its worst postwar recession. The amount was 940 billion yen more than in the budget for this fiscal year, which began in April, as welfare payments rose and tax revenues fell.
The cabinet's move came after expectations that Japan's economy would head for recovery for the first time in three years in the next fiscal year.
Japan's gross domestic product was expected to grow about 0.6 per cent during the next fiscal year, an improvement from a 3.3-per-cent contraction expected during the current fiscal year.
The government expected to see better demand and exports in the nation's private sector, which would help the world's second-largest economy expand.
The Bank of Japan's quarterly Tankan survey released Wednesday showed that business confidence among large manufacturers improved for the first time in more than two years although the index during the April-June quarter remained in negative territory.
The central bank said it expected the index to improve during the next three months.
A real comeback by major companies is necessary to finance the ballooning state budget amid a shortfall in corporate tax revenues.
