According to The Asahi Shimbun, the Japanese Cabinet approved a record 96.72 trillion yen (US$800 billion) initial general account budget for fiscal 2016, which will slightly reduce debt reliance to 35.6 percent.
The 0.4-percent increase from the initial budget for fiscal 2015 is due mainly to soaring expenditures for social security programs--especially the national pension program and medical services--as well as spending for defense and public works projects.
The draft budget marks the fourth consecutive year of increase.
Given improved corporate business performance, the government will reduce the issuance of new government bonds to the level prior to the 2008 collapse of Lehman Brothers that triggered a global economic downturn.
Spending for social security programs accounts for one-third of the entire general account. It will increase by 440 billion yen, or 1.4 percent, to 32 trillion yen to match an expected rise in the number of elderly people.
Even so, the government kept its promise to keep the increase within 500 billion yen so as not to jeopardize its efforts to regain fiscal health.
In line with Prime Minister Shinzo Abe’s slogan of “Ichioku Sokatsuyaku Shakai” (society which promotes the dynamic engagement of all citizens), an additional 500 billion yen over the fiscal 2015 figure will be earmarked for related programs, bringing the total to 2.4 trillion yen.
For example, spending for child-rearing and nursing care will be increased. Many low-income households will now be eligible for greater assistance in childcare.
Defense spending will increase by 1.5 percent, exceeding 5 trillion yen for the first time, to purchase equipment to counter China’s maritime advances and implement the relocation of a key U.S. military base in Okinawa Prefecture.
The government estimates that its tax revenues will increase 5.6 percent from fiscal 2015 to 57.6 trillion yen in fiscal 2016, the highest level in 25 years.
This will allow for the issuance of new government bonds to decrease by 2.4 trillion yen, or 6.6 percent, to 34.4 trillion yen, falling below the amount of the previous fiscal year for the fourth consecutive year.
The ratio of the debt to the overall budget will still stand at 35.6 percent, although it is 2.7 percentage points lower than fiscal 2015.
If you want to read this article in Japanese, please see the following link:
Subscribe to our English Newsletter