A record ¥55.3 trillion in government bonds could be issued in fiscal 2013 due to continued increases in spending on social welfare and interest payments, according to Finance Ministry estimates.
A copy of projections that the ministry presented to ruling party lawmakers Wednesday shows that social welfare expenditures could balloon to ¥30.5 trillion in fiscal 2013, compared with ¥27.3 trillion budgeted for the fiscal year that starts April 1.
To finance next year’s budget — at ¥92.30 trillion the biggest ever — the government will issue ¥44.30 trillion in new government bonds, an increase of 33.1 percent from what was planned under the previous initial budget.
The ministry’s forecast for new debt issuance is based on the assumption that the global economy recovers steadily and the government relies on nontax revenue of around ¥4 trillion to finance the general account budget in fiscal 2013.
Even if the government manages to keep outlays for public works projects at the same level as fiscal 2010, the projections showed that the general account budget is likely to expand to ¥100.3 trillion in fiscal 2013.
Debt-servicing costs are projected to come to ¥27.9 trillion, up from ¥20.6 trillion in fiscal 2010.
The ministry estimates tax revenues will rise to ¥40.7 trillion from ¥37.4 trillion in fiscal 2010. The government would still face a revenue shortfall of ¥55.3 trillion if it doesn’t introduce tax hikes.