Japan’s FY2021 Budget to be Largest ever at ¥106 trillion

The government began finalizing on Wednesday its budget for fiscal 2021, putting total general account expenditures in the mid-¥106 trillion range, setting a record high for the ninth consecutive year.

The fiscal 2021 budget is scheduled to be approved by the Cabinet on Dec. 21.

This will be the third year in a row that the budget will surpass ¥100 trillion, as a result of such factors as measures to deal with the spread of the novel coronavirus and growth in social security spending due to the aging of the population.

Social security expenditures, which account for more than one-third of general account spending, are expected to reach a new record high in excess of ¥36 trillion, surpassing the amount in fiscal 2020 (¥35.8608 trillion). This is the result of higher medical and nursing care service costs caused by the aging of the population.

The issuance of new government bonds, which will constitute new national debt, will increase for the first time in 11 years in an initial budget. Tax revenue for fiscal 2020 was initially forecast at ¥63.5130 trillion, but has been lowered to ¥55.1250 trillion, and it is difficult to expect a significant recovery in tax revenue in fiscal 2021.

The total amount of the fiscal investment and financing plan for fiscal 2021 is expected to be around ¥40 trillion, the largest ever for an initial plan. The amount will be about three times that in the initial plan for fiscal 2020 (¥13.2195 trillion), due to financial support for companies hit by the outbreak of the virus.

More than ¥24 trillion will be allocated for funding support for the Japan Finance Corporation.