The Japanese government is looking to reduce its budget next fiscal year for the first time in 12 years, highlighting concerns over the massive public debt of the world’s third-largest economy, a draft of the 2024-25 budget showed.
The budget is estimated to come to 112.1 trillion yen ($782 billion), compared with the initial 114.4 trillion yen set out in this fiscal year’s budget.
The move reflects the government’s will to restore its tattered public finances and revive a lacklustre economy.
Also on AF: Japan to Power Up World Chip Sector Dominance Bid
Decades of stop-start fiscal spending and reform have left Japan with the industrial world’s heaviest public debt burden – double the size of its economic output.
It is now fighting to achieve an even tougher goal of a balanced budget, excluding new bond sales and debt-servicing costs, by the fiscal year ending in March 2026.
Tax revenue for fiscal 2024-25 is estimated to come to 69.6 trillion yen, slightly overshooting this year’s estimate at 69.4 trillion yen, which would be a record amount if corporate profits recover and wage growth spreads.
Next year the government plans to forego pay increases to boost defence spending in the first of several years and reduce its 5-trillion-yen emergency budget so as not to squeeze its annual spending.
The government plans to trim new bond issuance for a third straight year, counting on tax revenue growth and spending cuts. Fresh borrowing would stand at around 34.9 trillion yen, down from 35.6 trillion yen for this year’s initial amount.
The budget draft will be compiled on Friday before being sent to parliament for debate and approval by the start of next fiscal year starting in April.
- Reuters, with additional editing by Vishakha Saxena
Also read:
Japan Government Space Spending Sparks Startup Investor Boom
Japan’s Salaries Surge Could See BoJ Turn to Tightening
Bank of Japan Seen Ready to End Negative Rates in Early 2024
Japan to Drop Quarterly Reports for Listed Businesses – Nikkei
