JAPAN ESE Prime Minister Shigeru Ishiba’s cabinet is expected to approve a record initial budget Friday for the next fiscal year that will ramp up spending on defense and support for local economies. The budget for the year starting in April 2025 will total around ¥115.5 trillion ($735 billion), according to a draft of the plan obtained by Bloomberg on Wednesday.
While the draft shows the government will still have to lean heavily on debt issuance to help fund the spending, record tax receipts will enable the cutting back of fresh bond issuance by almost a fifth to ¥28.6 trillion. The reduction of new issuance below ¥30 trillion in initial plans for the first time since 2008 is welcome news for a nation that has the highest government debt load among advanced economies. “The primary balance deficit will also likely turn out to be considerably smaller,” said Masaki Kuwahara, senior rates strategist at Nomura Securities. “The total budget amount appears to reflect the government’s consideration of fiscal consolidation.” The government aims to balance the budget excluding debt-servicing by the fiscal year starting in April, a goal that now seems a possibility after looking out of reach for years. The increase from the current fiscal year’s initial annual budget of ¥112.6 trillion is around 2.6 percent, largely in line with the government’s forecast for overall inflation in the current fiscal year. Ministries had earlier requested total outlays of ¥117.6 trillion. Among the biggest increases are a jump of more than 10 percent in defense spending to ¥8.5 trillion and an increase of around 7 percent in grants to local governments. Ishiba, a former defense minister, is a strong advocate of raising military spending and improving the working conditions of those employed in the nation’s defense forces amid a tense regional security environment in Asia. The rise in the defense budget largely fits in with increases already planned over coming year
BUDGET DEFENSE ECONOMY JAPAN TAXES
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