TOKYO – Japan’s initial budget for fiscal 2021 will total about 106.61 trillion yen ($1.03 trillion), a record high for the ninth straight year, as it plans to add 5 trillion yen to reserve funds for future response to the coronavirus pandemic, government sources said Thursday.
Topping 100 trillion yen for the third year in a row, the budget for the year starting in April will far exceed fiscal 2020’s initial budget of 102.66 trillion yen.
To finance the new budget, the government plans to issue new bonds worth around 43.60 trillion yen, up 11.04 trillion yen from the current year’s initial plan, marking the first year-on-year rise in 11 years on an initial basis, the sources said.
The budget has been drafted on the assumption that tax revenues will be about 57.45 trillion yen, down 6.07 trillion yen from the previous year, according to the sources.
The government recently revised down its revenue estimate in fiscal 2020 to 55.13 trillion yen, given the impact of the pandemic on corporate earnings.
Social security costs, accounting for about a third of Japan’s initial budget in recent years, will grow about 150 billion yen from fiscal 2020 due to the country’s fast-aging population, but at a slower pace than the government’s earlier estimate of a few hundred billion yen increase, according to the sources.
In any case, the figures could fuel concern about Japan’s fiscal consolidation. The country’s public debt exceeded 1,100 trillion yen, or well over 200 percent of gross domestic product, as of the end of fiscal 2019, the worst among major developed countries.
Prime Minister Yoshihide Suga’s Cabinet is expected to approve the draft budget on Monday.