This week, Japan will announce another record-breaking annual budget. Prime Minister Fumio Kishida increases spending before next summer’s elections, adding to the world’s heaviest debt burden.
The annual budget should increase to 107.6 trillion yen (943 billion U.S. dollars) from April. This is an increase of about 0.9% from last year’s initial expenditure plan. However, the final expenditure usually inflates over time due to additional budgets.
According to the report, tax revenue should rise to a record 65.2 trillion yen. It limits the issuance of new bonds to 36.9 trillion yen. The initial budget for this fiscal year requires the issuance of 43.6 trillion yen.
The expected increase in tax revenues indicates that the government’s efforts to support households and businesses during the pandemic have reduced the damage to the economy. However, the bond issuance shows that Japan still needs to borrow more than one-third of the funds to pay for its annual expenditures. These figures should be officially available later this week.
The annual budget will provide part of Kishida’s recent stimulus plan of more than 690 billion U.S. dollars to support the recovery of Covid.
How much does Japan fear the new Omicron virus outbreak?
The new Covid variant has spread in the United States and Europe. However, Japan has so far successfully avoided a large-scale outbreak. 73% of the new cases reported in the United States last week were identified as omicron. Meanwhile, fewer than 70 omicron cases were registered in Japan.
Consolidated spending aims to lay the foundation for what the prime minister calls a new form of capitalism. It distributes income more evenly and takes a longer-term perspective.
Kishida will face another critical election in the summer. This election may determine whether he will serve as prime minister or join many one-year Japanese leaders. His success in dealing with omicron and boosting the economy may be a critical factor in ensuring that the ruling coalition maintains control of both houses of the legislature.