Japan endorses record US$1.03 trillion budget to handle COVID-19 pain
21 December, 2020
Japan's cabinet approved on Monday (Dec 21) a record US$1.03 trillion budget draft for the next fiscal year starting in April 2021, the Ministry of Finance said, as the coronavirus and stimulus spending puts pressure on already dire public finances.
The 106.6 trillion yen (US$1.03 trillion) annual budget marked a 4 % rise out of this year's initial level or more for nine years in a row, with new debt worth 43.6 trillion yen making up 40.9 % of revenue.
From Europe to America, policymakers globally have unleashed a burst of monetary and fiscal stimulus to avoid a deep and prolonged recession as the pandemic shut international borders and sent many unemployed.
In Japan, fiscal reform has been shelved as Prime Minister Yoshihide Suga prioritised efforts to support the pandemic and boost growth to shore up tax revenue.
The spending plan, which came in line with a Reuters report out the other day, should be approved by parliament early next year.
It'll be rolled out along with a third extra cover this fiscal year as a combined 15-month budget aimed for seamless spending to help ease the virus pain and back Suga's goal of attaining carbon neutrality and digital transformation.
With public debt at a lot more than twice how big is Japan's US$5 trillion economy, by far the worst in the industrial world, fiscal reform is more of an urgent task than other countries.
The government expects 4 % real GDP growth for another fiscal year, rosier than economists' prediction of 3.4 per cent. If the economy undershoots growth estimates, that would erode tax income and warrant more borrowing to fill a budget gap.
The government's fiscal 2021 primary budget deficit - excluding new bond sales and debt servicing - sometimes appears at 20.4 trillion yen, a lot more than double this year's initial estimates, making the budget-balancing goal further elusive.
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