The Japanese cabinet on Monday approved a record budget proposal for the next fiscal year starting in April, including a stimulus to the pandemic-stricken economy and another hike in defense spending to counter China.
The budget proposal totals 106.6 trillion yen ($ 1.03 trillion), a 3.8 percent increase from the current year and the ninth consecutive annual increase.
Once again, the government is chasing a record defense budget, for the seventh consecutive year, this time of 5.3 trillion yen, up 0.5% from FY2020, as the Japan faces threats from an assertive China and an unpredictable North Korea.
Key military spending includes 57.6 billion yen to develop a next-generation fighter and 33.5 billion yen for the development of a new missile.
“We will build the necessary capabilities for national defense … to keep pace with the increasingly difficult security environment,” Chief Cabinet Secretary Katsunobu Kato said in a regular briefing.
The overall budget reflects the shadow cast by the coronavirus pandemic and the growing cost of supporting the country’s aging population, with social protection and pension programs estimated at 35.8 trillion yen.
Prime Minister Yoshihide Suga’s office is also keen to set aside a reserve of 5.5 trillion yen, which can be used for other anti-virus measures.
Japan braces for declining tax revenues as the coronavirus puts pressure on business activity, and the government will look to debt to cover around 40% of the budget.
The proposal will now go to parliament for approval, expected in the spring of next year.
© 2020 AFP