The Japanese government has planned a preliminary budget with a record ¥97.7 trillion in spending for the fiscal year beginnig April 1, 2018, and hopes to keep new debt issuance lower than the current year's levels on the back of substantial tax revenue as the economy improves, Reuters said, citing government sources.
The current budget called for ¥97.5 trillion in expenditures, the news agency reported.
Prime Minister Shinzo Abe will face the challenge of reviving the Japanese economy and restoring fiscal health after his cabinet approves the budget draft and another budget for the current year on Dec. 22, according to the report.
Tax income for the fiscal year 2018/19 is expected to be the highest since 1991 at ¥59.1 trillion, which would allow for an eighth consecutive annual reduction in new bond issuance to ¥33.7 trillion from the current year's planned ¥34.4 trillion.
The government is set to use nontax revenue of ¥4.9 trillion to restrict new bond issuance. This figure reflects a decrease from the current fiscal year's ¥5.4 trillion.
Moreover, the government plans to reduce debt servicing costs to ¥23.3 trillion from the current year's ¥23.5 trillion, thanks to Bank of Japan's negative-interest-rate policy.
Reuters said the budget highlights Japan's struggle to control its spending despite ever-increasing welfare costs due to an aging population, rising military spending fueled by regional tensions with North Korea, and the highest debt levels in the industrial world.