Gov’t eyeing record budget for FY 2018

December 2, 2017

Tokyo- The Japanese government is considering setting the amount of its general-account budget at a record high of around 98 trillion yen for fiscal 2018, which starts next April, informed sources said Friday.

The government plans to adopt the fiscal 2018 draft budget at a cabinet meeting on Dec. 22, the sources said.

Spending has been expanding due to natural increases in social security costs reflecting the country's aging society and growth in defense outlays amid North Korea's provocations.

Under its fiscal reconstruction policy, the government plans to limit annual growth in social security costs at 500 billion yen.

To achieve the goal, the government and the Liberal Democratic Party-led ruling camp are set to start full-fledged talks on cutting fees paid to medical institutions from health insurance programs.

But the government plans to increase technical fees paid to doctors and pharmacists and fees for nursing care services.

As a result, overall social security-related expenditures may reach 33 trillion yen under the fiscal 2018 general-account budget, the sources said.

Defense expenditures are expected to hit a record high, exceeding the 5,125.1 billion yen earmarked under the fiscal 2017 budget.

The request for tax revenue grants to local governments totaled 15,599.5 billion yen. The Finance Ministry hopes to reduce the amount of the grants through negotiations with the internal affairs ministry.

Meanwhile, fiscal 2018 tax revenue may exceed 58 trillion yen, roughly on par with levels during the country's bubble economy period in the 1980s, thanks to solid income and corporate tax revenue on the back of wage growth and strong corporate earnings amid the economic recovery, the sources said.

Some are concerned, however, that the possible tax revenue growth may weaken the government's fiscal consolidation efforts.

Despite an expected rise in policy spending, the issue amount for new Japanese government bonds in fiscal 2018, excluding refinancing bonds, is likely to decline for the eighth straight year on an initial budget basis.

Still, the government will need to procure some 34 trillion yen by issuing new JGBs, sources said. Jiji Press