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Japan govt adopts FY 2021 extra budget with record spending

  • November 26, 2021
  • , Jiji Press , 9:26 p.m.
  • English Press

Tokyo, Nov. 26 (Jiji Press)–The Japanese government adopted at an extraordinary cabinet meeting on Friday a fiscal 2021 draft supplementary budget featuring record general-account spending of 35,989.5 billion yen to shore up the coronavirus pandemic-battered economy.

 

The extra budget, which earmarks 31,562.7 billion yen for a package of economic stimulus measures compiled a week before, will be used to finance COVID-19 countermeasures and to realize Prime Minister Fumio Kishida’s key policy of achieving a virtuous cycle of economic growth and wealth redistribution.

 

The government will submit the draft budget to an extraordinary session of parliament expected to be convened on Dec. 6.

 

With the add-on spending program, the government’s total expenditures for the current fiscal year to March next year, including the initial budget, will reach 142,599.2 billion yen.

 

The economic package allocates 18,605.9 billion yen to prevent COVID-19 from spreading, 1,768.7 billion yen for resuming socioeconomic activities, 8,253.2 billion yen for initiating a “new form of capitalism” advocated by Kishida, and 2,934.9 billion yen for taking disaster management measures and boosting national resilience.

 

In the supplementary budget, the government will spend 1,947.3 billion yen to distribute COVID-19 handouts worth 100,000 yen per child aged under 19, while 1,813.4 billion yen will go to a program to grant reward points worth up to 20,000 yen to My Number social security and taxation identification card holders.

 

Meanwhile, the government set aside 260 billion yen to bring forward wage hikes for nurses, care workers and nursery teachers as part of Kishida’s redistribution policy.

 

An additional 268.5 billion yen will be spent to restart the government’s Go To Travel domestic tourism promotion campaign, raising total related expenditures in the fiscal year to 1,323.9 billion yen.

 

Also, 2,803.2 billion yen will be used for a program to provide up to 2.5 million yen each in relief to small companies with sales pushed down by the pandemic.

 

For COVID-19 countermeasures, 2,031.4 billion yen will be added to a program to help medical institutions secure beds, and 1,295.4 billion yen will be set aside for COVID-19 vaccinations. The government will increase grants to finance local governments’ coronavirus responses by some 6.8 trillion yen.

 

Japan is expected to see record tax revenue totaling some 63,880 billion yen for fiscal 2021, up 6,432 billion yen from the initial projection, thanks to brisk corporate earnings.

 

Still, the government will issue a further 22,058 billion yen in government bonds, as the tax revenue alone will not be enough to cover the proposed additional spending. This will raise the issuance amount for new government bonds, excluding refunding bonds, in fiscal 2021 to 65,655 billion yen.

 

The government views the draft supplementary budget, the fourth such budget since the pandemic started, and the regular budget for fiscal 2022, which starts in April, as a combined 16-month budget, so that fiscal spending can be made seamlessly between the two fiscal years.

 

After the cabinet meeting, Finance Minister Shunichi Suzuki told a press conference that the extra budget was compiled based on that idea that all necessary fiscal spending should be included without hesitation given the coronavirus crisis.

 

With the largest-ever supplementary budget, the central government will see its primary budget deficit expand to 41,352.6 billion yen in the current fiscal year.

 

It has become more difficult for Japan to meet the goal of achieving a surplus in the primary budget balance for the central and local governments in fiscal 2025, critics said.

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