Japanese government approves record budget, faces uphill battle in parliament Reuters writes
By Makiko Yamazaki
TOKYO (Reuters) – Japanese Prime Minister Shigeru Ishiba’s cabinet approved a record $730 billion budget for the next fiscal year on Friday, while limiting new bond issuance to a 17-year low due to record tax revenues.
However, Ishiba’s minority government faces an uphill political battle with opposition parties to push the budget through parliament early next year, which could hurt its already weak position in the polls.
The budget for the fiscal year starting in April is estimated at 115.5 trillion yen ($732.36 billion), up 2.6% from the current year’s 112.6 trillion yen, boosted by debt service and social security costs.
But record tax revenues are likely to help reduce new bond issuance to 28.6 trillion yen, the least since 2008.
As a result, the debt dependency ratio will be 24.8%, which means that new bond sales make up a quarter of the budget. This represents the first drop below 30% since 1998.
Japan’s Finance Minister Katsunobu Kato told a news conference on Friday that the government will “continue to work to achieve an economic turnaround and fiscal health.”
He also said the government was sticking to its target of running a primary budget surplus by the next fiscal year, although a detailed estimate would not be released until early 2025.
Since the budget plan needs the support of opposition parties to pass parliament, Ishiba’s minority government may be forced to give in to their demands and revise part of the plan during parliamentary debates.
The main opposition Democratic People’s Party (DPP) is demanding a more aggressive lifting of the income tax threshold in effective tax cuts, which could hurt tax revenues.
