Japan's government is planning a record $735 billion budget for the upcoming fiscal year due to increasing social security and debt servicing costs. This comes as the Bank of Japan scales back its decade-long stimulus program, placing greater responsibility on the government to stimulate economic growth. While aiming to improve public finances, the government intends to reduce new bond issuance next fiscal year. Japan's public debt burden remains the heaviest in the industrialized world, exceeding twice its annual economic output. The BOJ's shift away from stimulus adds pressure on Japan's fiscal health.
Japan 's government is set to compile a record $735 billion budget for the fiscal year from April due to larger social security and debt-servicing costs, adding to the industrial world's heaviest debt, a draft seen by Reuters showed.
In an attempt to improve public finances, however, the government plans to trim new bond issuance next fiscal year to 28.6 trillion yen from this fiscal year's initially planned 35.4 trillion yen, helped by tax revenue growth, the draft showed.Decades of stop-start fiscal spending and reform have left Japan with the industrial world's heaviest public debt burden — more than double the size of its annual economic output.
The draft budget, up from this fiscal year's 112.6 trillion yen, is expected to be approved by Prime Minister Shigeru Ishiba's cabinet on Friday for submission to parliament for deliberation early next year. The primary budget balance, which excludes new bond sales and debt servicing costs, will be in deficit of less than 1 trillion yen, keeping alive the possibility of achieving the government's goal of delivering a primary budget surplus by the next fiscal year.
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