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Japan FY 2022 budget requests to top 110 tril. yen for 1st time

  • August 25, 2021
  • , Kyodo News , 9:11 p.m.
  • English Press

TOKYO – Budget requests by Japanese ministries and agencies for fiscal 2022 are expected to total over 110 trillion yen ($1 trillion) for the first time due to swelling debt-servicing costs amid the coronavirus pandemic, government sources said Thursday.

 

The requests for the year starting next April, to be filed by next Tuesday, would hit a record high for the fourth straight year.

 

After assessing the requests, the Finance Ministry will draft the initial state budget in December before Diet deliberations. The draft could also reach a record by eclipsing the initial fiscal 2021 budget of 106.61 trillion yen, which included 5 trillion yen in funds reserved for responding to the pandemic.

 

Interest payments and other debt-servicing costs will surge 27.3 percent to a record 30.24 trillion yen under the new budget, the sources said by citing the ministry’s estimate.

 

The government has issued a large amount of government bonds to secure funds to cover coronavirus countermeasures and make up for chronic tax revenue shortfalls.

 

The country’s fiscal health, already the worst among major economies, has been deteriorating further with over 1,200 trillion yen worth of public debt, or well over 200 percent of gross domestic product, as of March.

 

Amid a rapidly graying population, health care and pension costs will likely continue to balloon, expected to grow by 660 billion yen from fiscal 2021 when they rose to a record 35.84 trillion yen, according to the sources. Social security spending has accounted for about a third of an initial budget in recent years.

 

The Defense Ministry will ask for 5.48 trillion yen, larger than the record 5.34 trillion yen for fiscal 2021, Defense Minister Nobuo Kishi said during a meeting of the ruling Liberal Democratic Party on national security.

 

With a larger defense budget, Japan will aim to strengthen its capability around remote southwestern islands to counter China’s growing maritime assertiveness, the sources said. The budget would also cover developing advanced technologies including unmanned aircraft using artificial intelligence.

 

As subsidies for local governments grappling with the pandemic, the Ministry of Internal Affairs and Communications will seek 15.86 trillion yen, according to the sources.

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