Japan's debt issuance dependency ratio in fiscal 2016 is likely to fall to 35 percent, the lowest in nine years, due to increased tax revenue, according to government sources.
In the next fiscal year starting April 1, the government plans to newly issue debt of around ¥34.4 trillion as it is compiling a record-high budget of over ¥96 trillion for fiscal 2016 amid swelling welfare costs due to Japan's graying population, the sources said Sunday.
The bond dependency ratio is that of new government bond issuance to total general-account revenue.
In fiscal 2016, tax revenue is likely to climb to ¥57.6 trillion on the back of improved corporate earnings, helping to cut the reliance on borrowings to the lowest level since fiscal 2007, when it stood at 31 percent, and marking a return to levels before the 2008 financial crisis.
The Cabinet of Prime Minister Shinzo Abe is set to approve the draft budget Thursday.
Despite the drop in bond dependency, however, Japan will still rely heavily on debt compared with other major economies. The ratio for fiscal 2015 stood at 15.5 percent in the United States, 25.4 percent in France and 0.1 percent in Germany.
Japan's ratio peaked at 51.5 percent in fiscal 2009 following the crisis triggered by the collapse of the investment bank Lehman Brothers Holdings Inc.
It remained above 40 percent until fiscal 2014 before falling to 36.5 percent in fiscal 2015 due to increased tax revenue.