TOKYO (Reuters) – Japan’s parliament approved a record $ 926 billion state budget on Wednesday for the next fiscal year starting April 1, with attention shifting to debate on a mid-year fiscal reform plan to rein in runaway government debt.
The 97.7 trillion yen ($ 925.89 billion) spending plan – above 97.5 trillion yen initially planned for the current fiscal year – features a large welfare outlay to respond to a fast-ageing population and a record military outlay to cope with regional tensions related to China and North Korea.
The spending demands will add to what is already the heaviest public debt burden in the industrialized world.
Failure to curb spending has cast doubt on Prime Minister Shinzo Abe’s will to back fiscal reform, as he counts on economic growth to boost tax revenue to reduce new borrowing and on the central bank’s low-interest rate policy to curb the high cost of servicing the mammoth public debt.
Analysts are calling for streamlining welfare spending, as Abe’s government is set to draw up a new fiscal plan around June.
The premier has pushed back a 2020/21 budget-balancing goal, with a pledge to ensure a social welfare system for all generations.
The budget was given final approval on Wednesday by the upper house of parliament, with the ruling bloc’s firm majority, after it sailed through the powerful lower chamber last month.
($ 1 = 105.5200 yen)