The government’s draft budget for fiscal 2018 is expected to total ¥97.7 trillion ($868 billion) — a record high for the sixth straight year — due in large part to swelling social security and defense spending, according to government sources.
Moderate economic expansion is expected to boost tax revenue to around ¥59.1 trillion, up around ¥1.4 trillion from fiscal 2017, which ended in March, the sources said.
The Cabinet is expected to approve Friday the draft general-account budget, which compares with ¥97.45 trillion in the initial budget for the current fiscal year.
For fiscal 2018, which begins in April, government bond issuance will be cut by around ¥700 billion to around ¥33.7 trillion, down for the eighth straight year on an initial budget basis to the lowest level since fiscal 2009.
With its fiscal health the worst among advanced countries, Japan is trying to reduce government bond issuance. But the government still relies heavily on government debt to finance its policy projects.
General expenditures, excluding debt servicing and tax revenue allocation to local governments, will likely total around ¥58.9 trillion, the sources said, up some ¥500 billion due partly to the aging of Japan’s population and additional spending to counter North Korea’s missile threat.
The budget will earmark around ¥33 trillion for social security outlays and around ¥5.2 trillion for defense spending.