Japan’s defense budget for fiscal 2021 will be around ¥5.34 trillion ($51.5 billion), a record high for the seventh straight year, government sources said Wednesday.
The government plans to make Japan’s entire initial budget for the year starting in April in the upper ¥106 trillion range, far exceeding the previous record of ¥102.66 trillion set in fiscal 2020, according to the sources.
The general account budget will top ¥100 trillion for the third straight year on an initial basis, due to growing social security and coronavirus response costs.
Prime Minister Yoshihide Suga’s Cabinet is expected to approve the draft budget on Monday after each ministry ends last-minute negotiations.
The Defense Ministry had made a budgetary request of ¥5.49 trillion, up 3.3 percent from the previous year, as it seeks to boost its capabilities in new domains including cyberspace, outer space and the electromagnetic spectrum, in a veiled response to China and Russia.
Up for the ninth consecutive year, the defense budget will also include outlays to build two naval ships equipped with Aegis missile interceptors after the ministry’s plan to deploy land-based systems was scrapped.
In addition to adding ¥5 trillion in reserve funds amid the coronavirus pandemic, Japan’s outlays for social security such as those needed for pensions have been swelling as the population rapidly ages.
But the government will try to contain the increase by lowering drug prices and other costs, the sources said.
Social security spending has accounted for about a third of the country’s initial budget in recent years.
As for tax revenue, the government predicts it to be below ¥60 trillion for fiscal 2021, given the expected fallout from the pandemic on corporate earnings, the sources said.
In the current fiscal year, tax revenue is estimated to be ¥55.13 trillion, revised downward from the initial ¥63.51 trillion.
The economic impact of the virus will likely force the government to issue more debts. New bond issuance for fiscal 2021 is expected to rise for the first time in 11 years on a year-on-year and initial basis.
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