(Reuters) TOKYO –A record 114.4 trillion yen ($839.3 billion) budget for the upcoming fiscal year was approved by Japan’s lower house of parliament on Tuesday, which is expected to add to the country’s already staggering debt load.
In order to counter threats from China and North Korea, the budget for the fiscal year starting in April includes record defence spending. It also includes record welfare spending to support a rapidly ageing population.
The administration of Prime Minister Fumio Kishida has also floated a new proposal to double childcare expenditures in an effort to stop the nation’s birthrate declines while maintaining strain on the already stretched government finances.
Passage of the budget in the influential lower chamber renders the upper house’s approval by March all but certain.
A flurry of large spending plans and soaring social welfare costs have left Japan with a debt pile that is 263% the size of its economy, which is the largest ratio among major economies and double that of the US.
Spending increased by a record 6.8 trillion yen thanks to Kishida’s divisive proposal to double Japan’s defence spending to 2% of GDP by 2027.
While still significantly lower than those in the U.S. and Europe, Japan’s rising long-term interest rates are testing the central bank’s ability to maintain low financing costs in a nation accustomed to decades of nearly zero inflation.
($1 = 136.3000 yen)