On April 27, 2022, pedestrians walked in front of the Bank of Japan headquarters building in Tokyo. -19 Moderate recovery from the pandemic.
Kazuhiro Nogi | AFP | Getty Images
Japan’s cabinet on Friday approved a record $730 billion budget for the fiscal year starting in April, while limiting new bond issuance to a 17-year low due to record tax revenue.
Driven by debt servicing and social security costs, the budget for the fiscal year starting in April is expected to be 115.5 trillion yen ($732.36 billion), an increase of 2.6% from the original 112.6 trillion yen for the current year.
But record tax revenue may help reduce new bond issuance to 28.6 trillion yen, the lowest level since 2008.
Therefore, the debt dependency ratio is 24.8%, which means that new bond sales account for a quarter of the budget. This is the first time since 1998 that it has fallen below 30%.
However, the budget plan may struggle to pass parliament as Prime Minister Shigeru Ishiba’s ruling coalition lost its majority in October elections and needs support from opposition parties to pass the legislation.
One of the main opposition parties has called for a more aggressive increase in income tax thresholds amid effective tax cuts that could hurt revenue collections.
