Fiscal 2015 budget requests climb to record ¥101.7 trillion

Kyodo

Budget requests for fiscal 2015 have surged a record ¥101.7 trillion amid Prime Minister Shinzo Abe’s push to halt Japan’s population decline and remilitarize, government officials said Friday.

It is the first time general-account budget requests have topped the ¥100 trillion ($961.7 billion) line, highlighting the difficulties Japan will face in restoring its fiscal health, which is the worst among the major industrialized economies.

The general-account budget requests for the fiscal year starting April 2015 were around ¥6 trillion higher than ¥95.9 trillion set aside for the fiscal 2014 initial budget.

By ministry and agency, the Health, Labor and Welfare Ministry requested ¥31.7 trillion, topping ¥30 trillion for the third straight year, after vowing to improve the environment for child-care facilities amid growing enrollment for nursery schools.

The Finance Ministry sought a record ¥25.8 trillion for interest payments and other debt-servicing costs.

The Defense Ministry requested a record ¥5.05 trillion for a new submarine, F-35 stealth planes and other equipment, as well as U.S. military realignment costs as it launches an island defense initiative.

Many ministries and agencies called for more spending to support child-raising efforts and prop up local economies. But most of their policy proposals don’t break any new ground and are apparently aimed at garnering public support in the run-up to the quadrennial unified local elections next spring, some analysts say.

The Abe administration promised in its longer-term economic blueprint in late June to drastically expand the birthrate promotion budget and stabilize the population at around 100 million after 50 years.

About ¥3.9 trillion is expected to be earmarked for measures to deal with the graying population and to execute Abe’s “third arrow” — an economic growth strategy designed to boost the corporate sector, call for structural reforms, and more recently, help regional economies outside Tokyo.

The government did not put a ceiling on budgetary requests for fiscal 2015, because tax revenues cannot be projected pending a decision on whether to proceed with the second stage of the consumption tax hike, which will complete the levy’s doubling to 10 percent in October 2015. The first stage hiked it to 8 percent in April.

While the Finance Ministry is likely to try to trim the budget requests to below ¥100 trillion, it may end in failure as ruling lawmakers are also urging Abe to aggressively spend public money ahead of the elections.

“We’ll make every effort to slash wasteful expenditures in order to achieve a balance of economic growth and fiscal rehabilitation,” Finance Minister Taro Aso said at a press conference earlier Friday.

The government normally drafts its state budget for the next fiscal year, in December.

Total policy spending requests, including for social security, national defense, industrial development and public works projects, reached about ¥75.9 trillion.

The Education, Culture, Sports, Science and Technology Ministry requested ¥5.9 trillion while proposing the improvement of local education programs.

The budget sought by the Land, Infrastructure, Transport and Tourism Ministry rose to ¥6.7 trillion as it seeks money for bolstering disaster prevention, while budget request for the Agriculture, Forestry and Fisheries Ministry climbed to ¥2.7 trillion.

The Foreign Ministry requested ¥738 billion to step up efforts to disseminate information overseas about territorial and other diplomatic issues.