Japan unveils record 114.4 trillion-yen budget in fresh boost to military capacity

Tokyo: Japan on Friday announced a budget of 114.4 trillion yen ($863 billion) for the next fiscal year beginning April, marking increased military spending and higher social security costs for its population.

Endorsed by Prime Minister Fumio Kishida’s cabinet on Friday, the highlights of the budget include record expenditure earmarked for defence and welfare spending for a country that has an ageing population. Allocation for defence in the budget was on expected lines as Japan confronts regional security issues from an aggressive China and an unpredictable North Korea.

To fund defence spending on warships and other vessels, the Japanese government decided to use construction bonds worth 434.3 billion yen, to be issued in fiscal 2023, in an unprecedented move.

The budget got a boost from Kishida’s controversial plan to double Japan’s defence spending to 2% of GDP by 2027, straining Japan’s already tattered finances under the weight of public debt at 2.5 times the size of its economy.

The budget draft may help Japan to rake in a record tax revenue worth 69.44 trillion yen, reflecting improving corporate profits and 69.44 trillion yen to lower new bond issuance to 35.62 trillion yen.

The budget assumed next fiscal year’s exchange rate at 137 yen to the dollar, the weakest since 2010, in calculating fiscal 2023 budget spending for defence and diplomacy, the officials said.

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