Japan enacts record ¥101 tril budget for FY2019

TOKYO, Mar 27, 2019, Kyodo. The Diet on Wednesday enacted a record 101.46 trillion yen ($920 billion) budget for fiscal 2019 to fund increased spending on social security and defense as well as stimulus measures to buoy the economy after an upcoming consumption tax hike, reported the Japan Today.

The House of Councillors controlled by the ruling coalition of the Liberal Democratic Party and Komeito approved the budget following its passage by the House of Representatives on March 1.

While the government routinely draws up supplementary budgets later in the fiscal year to cover any additional spending, this is the first time the general account budget has topped 100 trillion yen on an initial basis.

The centerpiece of the budget for the year starting on April 1 is a 2.03 trillion yen stimulus package that Prime Minister Shinzo Abe hopes will underpin domestic demand after the consumption tax is increased from the current 8 percent to 10 percent in October.

The package includes a rebate program for purchases made by credit cards and other cashless means, shopping vouchers for households with low incomes or small children, and public works spending to shore up infrastructure against natural disasters.

As in past years, the largest chunk of the budget, a record 34.06 trillion yen, has been set aside for social security outlays including on health care and pensions, which are swelling amid a rapidly aging population.

Defense spending accounted for a record 5.26 trillion yen, rising from the previous year due in part to purchases of the Aegis Ashore missile defense system and half a dozen F-35A stealth fighters.

The budget, the enactment of which had already been guaranteed after clearing the more powerful lower house, has been the subject of some drama.

After Abe’s cabinet signed off on a draft of the budget late last year, it came to light that government officials had been publishing faulty jobs data for nearly 15 years.

This had led to the underpayment of work-related benefits to more than 20 million people, necessitating the addition of 650 million yen to the budget to cover payouts.

A steady rise in government spending — the initial budget has marked record highs for the past seven years — means Japan remains far from consolidating its battered fiscal health despite an increase in tax revenue.

Japan’s fiscal health is the worst among major industrialized economies, with public debt more than twice the size of gross domestic product.

The government expects a record 62.50 trillion yen in tax revenue during fiscal 2019, with issuance of new government bonds falling slightly to 32.66 trillion yen.