Japan’s record $1 trillion budget focuses on COVID-19 damage to growth, debt

Japan’s cabinet approved a record $1.03 trillion budget draft for the next fiscal year beginning in April 2021 on Monday. The Japanese Ministry of Finance said that economic spending put pressure on public finances.

The 106.6 trillion yen ($1.03 trillion) annual budget was boosted by record military and welfare outlays. It rose 4% from this year’s initial level, increasing for nine straight years, with new debt comprising at least a third of revenue.

Policymakers all over the world have released monetary and fiscal stimulus aids to avoid a deep recession as the pandemic closed international borders and prompted wide-scale unemployment.

In Japan, fiscal reform has been postponed as Prime Minister Yoshihide Suga focused on containing the virus and boost growth, despite public debt ballooning to more than twice the size of Japan’s $5 trillion economy.

The spending plan will be released with a third extra budget for this fiscal year to lessen damages caused by the coronavirus and to support Suga’s goal of achieving digital transformation and carbon neutrality.