Japanese Government Finalizes Next Year's Budget at 1,137 Trillion Won... "Record High for 9 Consecutive Years"

Corona Measures Contingency Fund of 5 Trillion Yen... Concerns Over Worsening Fiscal Health Increase

Japanese Prime Minister Yoshihide Suga
[Photo by Reuters]

[Asia Economy Reporter Jeong Hyunjin] The Japanese government finalized the general budget for the 2021 fiscal year (April 2021 to March 2022) on the 21st, amounting to over 106.6 trillion yen (approximately 1,137 trillion won). This is the first budget plan formulated by the cabinet of Prime Minister Yoshihide Suga and marks the largest scale ever recorded.

According to NHK and other sources, the Japanese government confirmed the next fiscal year's general account budget of 106.6097 trillion yen at the Cabinet meeting chaired by Prime Minister Suga on the same day, and decided to submit it to the regular Diet session opening in January next year. This represents a 3.8% increase compared to this year and exceeds 100 trillion yen for the third consecutive year. The record high has continued for nine consecutive years.

The general expenditure budget allocated for defense and social security increased by 8.4% to 66.902 trillion yen. Among this, the social security budget was set at 35.8421 trillion yen, marking an all-time high due to aging population, and the defense-related budget was set at 5.3422 trillion yen, 0.5% more than this year, increasing for the ninth consecutive year and reaching a record high.

A reserve fund of 5 trillion yen was allocated for COVID-19 countermeasures that can be executed without Diet approval. This aims to strengthen the systems of public health centers and the National Institute of Infectious Diseases to prevent the spread of COVID-19.

The next fiscal year's budget takes into account the decline in corporate performance due to COVID-19, estimating tax revenue at 57.448 trillion yen, a 9.5% decrease compared to this year. To cover the shortfall in tax revenue, the Japanese government plans to issue new government bonds worth 43.597 trillion yen. NHK reported that this is the first increase in new bond issuance in 11 years.

Based on this, the long-term debt of the Japanese central government and local governments is projected to reach 1,209 trillion yen by the end of next year. This exceeds twice Japan's annual Gross Domestic Product (GDP), raising concerns about fiscal deterioration. The Japanese government allocated 23.7588 trillion yen in next year's budget for principal repayment and interest on government bonds, 1.7% more than this year.

This content was produced with the assistance of AI translation services.