|Japanese PM Naoto Kan has said that the country will need a sizable second emergency budget later in the year [AFP]
Japan has drawn up an emergency budget worth about $50bn to help finance reconstruction and rehabilitation efforts in the wake of the earthquake and tsunami that hit the country on March 11.
The Japanese cabinet has approved the budget for 4.02 trillion yen, the finance ministry said on Friday.
The country's parliament is expected to pass the budget next week, and it is should be enacted by May.
"This is the first step toward rebuilding Japan after the major disasters," Yoshihiko Noda, the finance minister, told reporters.
About 1.2 trillion yen ($14.64bn) have been allocated to fix roads and ports damaged by the twin disasters, which decimated much of industrial northeastern Japan.
Over 362 billion yen ($4.42bn) have also been allocated to build temporary homes for survivors of the disaster, with another 352 billion yen for clearing rubble.
On Friday, Naoto Kan, the country's prime minister, said that the country will be building as many as 100,000 temporary homes for earthquake and tsunami survivors. Kan said that the government hoped to finish building 30,000 homes by the end of May.
Earlier, the government had said that the total cost of the 9.0-magnitude earthquake and 15-metre tsunami could hit $309bn.
Prime minister Kan, meanwhile, has said that a sizable second "extra budget" would be required at some point in the future.
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"We must compile a second extra budget of a significant size," Kan was quoted by the governor of Iwate prefecture as saying in a meeting, the Jiji news agency reported on Friday.
On Thursday, the Organisation for Economic Co-operation and Development (OECD) said that Japan should move to increase its sales tax by as much as four times its current rate, in order to deal with the deficit that it will incur as a result of spending on reconstruction.
In a report, economists for the association of industrialised countries said that Japan's public debt was expected to grow to more than twice its gross domestic product (GDP), leaving it little choice but to increase the sales tax from its current level of five per cent.
Financial markets have been keeping a close eye on government borrowing in the wake of the disasters, in order to gauge how deep into debt the country will be going.
While Japan has so far kept to its promise not to issue new bonds to finance reconstruction, PM Kan said on Friday that the issuance of fresh government bonds would be necessary in order to finance the second budget.
He said that the country would have to heed market perceptions when it came to the matter of how and when to repay the debt.
Although Japan's current debt is about twice the size of its $5 trillion economy, it does not face a debt crisis such as those seen in Greece and Portugal as most of said debt is owed to domestic creditors, as opposed to foreign banks.