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Japan faces $2bn price tag for flood rebuilding

Public projects and farmland restoration expected to force budget expansion

Workers repair a road in Japan's Okayama Prefecture on July 17.

TOKYO -- Japan is staring at a more than 270 billion yen ($2.39 billion) bill to rebuild infrastructure destroyed by torrential rains that swept through the western part of the country earlier this month, straining an already overstretched government budget.

Authorities estimate it will cost 260.9 billion yen to fix levees, railway bridges, roads and other public works damaged by floods and landslides, which left over 200 people dead or missing.

Another 9.5 billion yen will likely be needed to restore farmlands, as well as farm roads and other supporting structures, while 250 million yen would be required to repair storage and other facilities owned by agricultural and fishing cooperatives. The estimates were compiled in mid-July, and could change depending on later surveys.

The national government is preparing to declare the rains an "extremely severe" disaster that qualifies for increased subsidies for reconstruction projects. It will cover 84% of the costs of public works projects, up from the usual 70%, and 95% of agricultural recovery efforts, a 13-point boost.

It is also looking at putting together a financial support package for affected small and midsize businesses, which sustained an estimated 407.5 billion yen worth of damages -- 150% more than in the 2016 Kumamoto earthquakes in southwestern Japan. Measures to provide housing for victims and restore their livelihoods are also on the table.

To pay for the reconstruction costs, the government plans to use reserve funds set aside in the current fiscal year's budget, as well as disaster recovery funds and other sources. But parts of the emergency funds are already earmarked for other purposes, so lawmakers will have to authorize additional spending in a supplementary budget.

The Kumamoto earthquakes required an estimated 290 billion yen in public works spending, and caused 160 billion yen worth of damage to small and midsize-sized companies. Lawmakers passed a 778 billion yen supplementary budget in fiscal 2016 to fund recovery efforts.

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