Japan Cabinet approves $922bn budget for next fiscal year

The Japanese Cabinet Tuesday approved a 95.9 trillion yen ($922 billion) budget for next fiscal year, calling for higher spending for defense and public works. The budget for fiscal 2014 starting next April is the second after Shinzo Abe became prime minister, whose main thrust is to lift the country's economy out of its prolonged deflation and strengthen fiscal health. Of the 95.88 trillion yen, 23.27 trillion yen will go for national debt service costs. With higher expenditures envisaged for defense, public works projects and social security programs, policy spending will hit a record 72.61 trillion yen, up 2.24 trillion yen from the original budget in the previous year, Kyodo News reported. Tax revenues were estimated at 50 trillion as the sales tax is scheduled to 8 percent starting April from the current 5 percent. Higher revenues also are expected from corporate taxes which are expected to increase as the economy recovers. As part of the government's fiscal reform, new bond issue will not exceed 41.25 trillion yen, down 1.60 trillion yen from the amount set under the initial state budget for fiscal 2013. "As we hope many firms will raise wages and the economy will enter a virtuous circle as soon as possible, we will be committed to providing a tailwind for the economy across the country," Abe was quoted as telling a board meeting of his Liberal Democratic Party. Social security programs, which include pensions and medical costs, will exceed 30 trillion yen to meet the needs of the country's graying population. These programs will account for about the 40 percent of the policy spending. Public works spending will go up 12.9 percent to 5.97 trillion yen. Defense expenditures will be up 2.8 percent to 4.88 trillion yen to pay for Japan's new strategy that calls for strengthening surveillance of its territorial waters. Japan's fiscal debt totaled 1,011.2 trillion yen at the end of September, or more than 200 percent of the country's gross domestic product.