Japan govt adopts record ￥107 tril. budget bill for FY 22

Jiji Press

16:50 JST, December 24, 2021

TOKYO (Jiji Press) — The government on Friday adopted a budget bill for fiscal 2022 calling for general-account spending of ¥107,596.4 billion, a record high for the 10th straight year.

The government aims to achieve an early normalization of social and economic activities by prioritizing budget allocation for measures to fight the prolonged coronavirus pandemic and also for concrete steps to realize Prime Minister Fumio Kishida’s signature policy of creating a virtuous cycle of economic growth and wealth redistribution.

The total general-account spending amount represents a rise of 0.9% from the initial budget for fiscal 2021, which ends next March, topping ¥100 trillion for the fourth consecutive year.

The budget bill will be submitted to an ordinary Diet session to be convened early next year.

The government regards the fiscal 2022 budget as a 16-month budget integrated with a fiscal 2021 supplementary budget to seamlessly finance coronavirus and other measures, with combined expenditures totaling ¥143.6 trillion.

Aiming to make economic growth sustainable, the government will step up spending in fields of science and technology and for promoting the digitalization of society in regional areas.

As a pillar of wealth distribution measures, the government will work on wage hikes for nurses, caregivers, nursery teachers and others by earmarking related funds totaling ¥58.8 billion.

The government will secure reserves worth ¥5 trillion that it can use for coronavirus measures without parliamentary procedures, the same amount as fiscal 2021.

The budget bill calls for social security outlays of ¥36,273.5 billion, up 1.2%, with the total hitting a record high and accounting for over 30% of the overall expenditures.

Social security costs were projected to automatically rise by ¥660 billion, against the backdrop of the aging of the country’s population and other factors, but the government aims to limit the growth to ¥440 billion, including by deciding to double the share of out-of-pocket medical fees paid by some elderly people.

Defense expenditure will grow 1.1% to ¥5,400.5 billion, including funds for the development of new fighter jets.

Debt-servicing costs will increase 2.4% to ¥24,339.3 billion.

The country’s tax revenue is estimated to jump 13.6% to reach a record high of ¥65,235 billion, with corporate tax and income tax seen growing on the back of a recovery in corporate earnings from a slump caused by the COVID-19 crisis.

The amount of new Japanese government bond issuance aimed at making up for a revenue shortfall is projected to drop 15.3% to ¥36,926 billion. The government will see its primary budget deficit shrink to some ¥13 trillion from the fiscal 2021 initial budget level of around ¥20 trillion.

Of the total new government bond issuance, deficit-covering bonds will account for ¥30,675 billion, down 17.7%. The government budget’s reliance on debt will stand at 34.3%, down from around 40% in the previous year’s initial budget.

The outstanding amount of Japanese government bonds is seen totaling ¥1,026 trillion.