The Japanese government plans a budget of record 97.45 trillion JPY (830 billion USD) for fiscal 2017, while maintaining debt below levels this year. The draft budget is a challenge to the efforts of Prime Minister Shinzo Abe to streamline costs and to continue with fiscal consolidation to curb the heaviest debt burden of the industrialized world. The budget is a test of the resolve of Prime Minister to achieve a primary budget surplus in fiscal 2020, which does not seem an easy task.
The budget expenditures for the fiscal year beginning April 1, marked increase from this year’s 96.7 trillion JPY, reflecting higher costs for social security and the cost of services for a rapidly aging population.
The government aims to approve the draft budget for fiscal 2017 at a cabinet meeting on Thursday and plans to increase by a small amount and the current budget for the third time this year.
The forecast shows that tax revenues for fiscal 2017 will amount to 57.71 trillion JPY, with only 110 billion JPY more than the current year.The government plans to sell new bonds worth 34.37 trillion JPY, which would be a nine-year low.
To keep new bond issuance, Japan relies on a large amount of non-tax revenues – 5.37 trillion JPY compared with 4.69 trillion JPY in the current fiscal year.
It is also expected the government to reduce the cost of debt servicing, thanks to low interest rates, part of the policy of the Bank of Japan.
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