TOKYO • Japan’s budget for the fiscal year starting in April 2019 (FY19) will top ¥100 trillion (RM3.72 trillion) for the first time, highlighting the government’s struggle to curb spending in the developed world’s most indebted nation.
The budget will increase 3.8% to about ¥101.5 trillion, according to a draft budget document obtained by Bloomberg News. Almost a third of that spending will be paid for with debt issuance, although the amount of bonds issued will decline for a seventh straight year.
A raft of measures to offset the economic impact on domestic demand of a sales tax hike next year also form a large part of the extra spending.
Japan hopes the tax hike will help it shrink its massive public debt over the longer term, but the nation’s rapidly aging population makes reining in social security spending increasingly difficult.
The details of the budget are as follows:
General spending of ¥62 trillion. Debt servicing costs of ¥23.5 trillion. Forecast tax revenue of ¥62.5 trillion. Targeted revenue from bond issuance at ¥32.7 trillion. Payments to regional and local governments will be ¥16 trillion. The bond dependency ratio, which shows how much of total income is from selling bonds, will drop to 32.2% from 34.5% last year. Other revenue of ¥6.3 trillion.
The government regularly crafts extra budgets later in the fiscal year that can push up spending further, so the initial budget numbers don’t give a full picture of all the spending that will happen next year.