As a result of greater social security costs due to an ageing population and increased military spending, Japan published its record 114.4 trillion yen ($863 billion) budget on Friday.
The budget, which was approved by the cabinet of Prime Minister Fumio Kishida on Friday along with a plan to issue bonds, includes record military and welfare spending for a nation with an ageing population and as it deals with regional security concerns from an increasingly assertive China and an unpredictable North Korea.
The government made the extraordinary decision to employ construction bonds worth 434.3 billion yen, to be issued in fiscal 2023, to pay for defence spending for military facilities, warships, and other vessels.
Kishida’s divisive plan to increase Japan’s defence expenditure to 2% of GDP by 2027 gave the budget a boost, straining the country’s already fragile finances under the weight of a public debt that is 2.5 times the size of its economy.
The budget draught predicted that Japan would bring in record tax revenues of 69.44 trillion yen, reflecting increasing corporate profitability, and that this amount would reduce new bond issuance to 35.62 trillion yen.
According to the officials, the budget used the weakest exchange rate since 2010 to estimate fiscal 2023 budget spending for defence and diplomacy, which was 137 yen to the dollar.
