The Japanese cabinet on Friday approved a 107.60 trillion yen ($940 billion) draft budget for fiscal 2022, marking a record high for the 10th year in a row.
By component, social security spending is the largest part, increasing 440 billion yen to a record 36.27 trillion yen and accounting for more than a third of the overall budget due to increasing medical costs pushed up by the aging population, reports Xinhua news agency.
The budget for debt-servicing costs rose to 24.34 trillion yen from 23.76 trillion yen a year earlier.
The government will issue new state bonds worth 36.93 trillion yen, down from the fiscal 2021 initial budget’s 43.60 trillion yen.
Defence spending will reach the largest-ever amount of 5.40 trillion yen, up for the eighth consecutive year.
The Jgovernment will also set aside 5 trillion yen as a reserve fund for future responses to the pandemic, the same amount appropriated for the current fiscal year. The funds can be spent without Diet approval.
With the gradual recovery from a pandemic-triggered slump, the government expects a record-high tax revenue of 65.24 trillion yen, larger than 57.45 trillion yen originally projected for the current fiscal year when compiling the initial budget of the year.
Prime Minister Fumio Kishida’s administration will submit the draft budget to an ordinary Diet session expected to be convened on January 17, aiming to have it enacted by the end of March.
Japan’s fiscal health has been the worst among major economies.
Due to dependence on borrowing to fund its expenditures, the government debt is expected to grow to 1,026.50 trillion yen by the end of fiscal 2022 from an estimated 990.30 trillion yen at the end of fiscal 2021.
However, a primary deficit of 13.05 trillion yen is expected for fiscal 2022, better than the 20.36 trillion yen deficit under the fiscal 2021 initial budget.