Japan to unveil record $864 billion budget driven by military costs
Reuters
Published Dec 22, 2022 09:28PM ET
Updated Dec 22, 2022 11:15PM ET
By Tetsushi Kajimoto and Takaya Yamaguchi
TOKYO (Reuters) - Japan is set to unveil on Friday a record $864 billion budget for the next fiscal year from April, pushed up by increased military spending and higher social security costs for a fast-ageing population, according to a final draft reviewed by Reuters.
The draft budget - to be endorsed by Prime Minister Fumio Kishida's cabinet along with government bond issuance plan - points to a narrow path for the government to achieve its fiscal target as it tries to pull the world's No.3 economy out of the COVID-induced doldrums.
Tokyo aims to achieve a primary budget surplus, excluding new bond sales and debt servicing costs, by the fiscal year ending March 2026.
The budget's size at 114.4 trillion yen marks a big jump from the current fiscal year's initial figures at 107.6 trillion yen. The spending will be funded by a large amount of bond sales, with the bond dependency ratio of 31.1% underscoring the fiscal constraints faced by the government.
Defence accounts for the bulk of the increase in fiscal 2023 budget as Kishida sets his sights on doubling Japan's annual defence spending to 2% of GDP within five years to deal with an ever-assertive China and an unpredictable North Korea.
For fiscal 2023, the defence spending amounts to 6.8 trillion yen, up 1.4 trillion yen from this year. The government would also set aside 3.4 trillion yen to help finance its five-year defence build-up plan.
The need to boost Japan's military spending comes at a time of intensifying economic challenges as the Ukraine war, soaring inflation and rising rates worldwide push the global economy to the brink of recession.
All of this means a longer road to reducing Japan's public debt that tops 2.5 times of the size of its economy.
On the brighter side, tax revenue is seen hitting a record 69.4 trillion thanks in part to recovery in corporate profits, allowing the government to reduce new bond sales by 1.3 trillion yen to 35.6 trillion yen.
($1 = 132.3700 yen)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.