Japan's initial budget for fiscal 2022 starting in April is expected to surpass ¥107 trillion ($950 billion), marking a record high for the 10th straight year, mainly due to growing social security and national defense costs, government sources said Tuesday.
As it did when compiling the initial budget for the current fiscal 2021 that totaled ¥106.61 trillion, the government plans to set aside ¥5 trillion for reserve funds to continue to fight the COVID-19 pandemic, according to the sources. Such funds can be spent without parliamentary discussion.
The amount of new bond issuance to finance the budget could possibly top the current fiscal year's initial plan of ¥43.60 trillion. If realized, it would further worsen Japan's fiscal health, the worst among major developed countries with public debt exceeding ¥1,200 trillion as of March this year.
Prime Minister Fumio Kishida's Cabinet aims to approve the draft general-account budget in late December, and have it passed by March in an ordinary parliamentary session to be convened in January, the sources said.
Tax revenue in the next fiscal year is estimated to total more than ¥60 trillion, larger than the ¥57.45 trillion in fiscal 2021, reflecting a rebound in corporate earnings, especially those of manufacturers, from the adverse impact of the pandemic, according to the sources.
New bond issuances could end up swelling from the initially planned sum since the government has drawn up large-scale supplementary budgets almost every year.
Last week, Kishida's Cabinet approved a record ¥35.99 trillion extra budget for fiscal 2021 to fund its latest economic stimulus package to underpin the virus-hit economy, with new government bonds worth ¥22.06 trillion set to be issued.
The administration aims to have it clear the Diet in an extraordinary parliamentary session to be convened on Dec. 6.
Spending on social security, such as costs for pensions and medical services, is expected to grow further in the coming fiscal year as the population rapidly ages, the sources said.
The government is also considering increasing the country's defense outlays to hit a record of about ¥5.4 trillion, as Kishida, who became prime minister about two months ago, has pledged to beef up national security amid China's growing military clout and North Korea's nuclear and missile threat, according to the sources.
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