Japan approves record budget for next fiscal year

Japan approves record budget for next fiscal year

Japan’s cabinet has approved a record budget for the next fiscal year amid rising social security costs and a government already struggling with the developed world’s biggest debt.

Spending by the Japanese government will increase by about 1.2% to 102.7 trillion Yen ($939 billion) on April next year, the Finance Ministry confirmed on Friday. Outlays on social security will account for a third of spending.

Japan Prime Minister Shinzo Abe has been trying to narrow the deficit and rein in debt that exceeds 200% of gross domestic product. However, rising costs for health care and pensions has been proving it to be difficult. In the short-term, a stimulus package unveiled this month to boost flagging growth would further complicate the effort though a sales tax hike in October could bring in more money.

“There hasn’t been a lot of change to overall spending, but the stimulus package adds to the bloat,” said Harumi Taguchi, Tokyo-based principal economist at HIS Markit.