TOKYO – The government of Japan announced on Friday its draft budget for the next fiscal year that includes a 1.2 percent increase in expenditure compared to 2019 and plans to allocate nearly 23 percent of revenue to cover public debt service.
Prime Minister Shinzo Abe’s cabinet is set to table before the parliament a draft budget of 102.66 trillion yen ($939.21 billion) for the fiscal year that begins in April next.
The draft announced at the end of a meeting represents a 1.2 percent annual increase in the expenditure compared to the current fiscal year ending March 31, 2020.
Chief Cabinet Secretary Yoshihide Suga in a press conference justified the increase owing to higher spending on social security and stimulus policies to boost the economy.
Of the total budget amount, 77.3 percent will be used to cover government expenses and 22.7 percent will be allocated towards the public debt service of Japan, the world’s third largest economy, after the United States and China.
At the end of 2018, Japan’s public debt amounted to 201 percent of its nominal gross domestic product (GDP), the highest percentage among developed countries.
The 2020 draft budget envisages the issuance of additional government debt bonds worth 32.56 trillion yen, which is 0.32 percent less than the figure planned for the current fiscal year.
The data, provided by the Ministry of Finance, implies the tenth consecutive annual reduction in the issuance of additional government debt bonds.
But if the refinancing of the current financial instruments is included, the figure amounts to 153.46 trillion yen, representing the first annual increase in six years.
One-third of the 2020 budget will be allocated to cover the costs of social security, which have been rising in Japan due to a progressively aging population and a declining birth rate, a major challenge faced by the Abe government.
The draft also seeks an annual increase of 1.1 percent in defense spending, amounting to 5.31 trillion yen, marking the seventh consecutive increase in this field.
As part of measures to boost the economy, the government has proposed to allocate a total of 6.86 trillion yen for infrastructure works.
On Dec. 5, the Japanese government approved a three-year plan worth 26 trillion yen to stimulate economic growth and improve infrastructure for disaster preparedness.