Japanese Diet enacts record ¥106.61 trillion budget for fiscal 2021, ODA budget increases for six consecutive years

10:27 AM 28/05/2021 | Lượt xem: 4536 In bài viết | send email

Gửi góp ý

On March 26th, Japanese Diet enacted a record high budget of 106.61 trillion yen for fiscal 2021 to support measures against the fallout amid the COVID-19 pandemic and finance its increasing social security and defense costs, forgoing fiscal consolidation once again.

The new budget, to start on April 1, amounting 106.61 trillion yen (US$976 billion) was first passed by the House of Representatives in early March and approved by the House of Councilors on March 26th. Both houses are controlled by the ruling coalition of the Liberal Democratic Party and Komeito.

Japanese budget has been increased for nine consecutive years and the budget surpassed 100 trillion yen (US$913.38 billion) for the third straight year. It may be increased further if Japanese Prime Minister Yoshihide Suga chooses to form supplementary budgets in an effort to curb the COVID-19 pandemic. In fiscal 2020, the government spending amounted to 175.69 trillion yen (US$1,604.7 billion), which was expanded from the initial 102.66 trillion yen (US$937,67 billion).

The largest part of the budget in recent years has been allocated to financing social security services, including health care and pensions, in order to support the country's rapidly aging population. The social security services budget for fiscal 2021 reached a record high of 35.84 trillion yen (US$327.3 billion). For the upcoming fiscal year, the Japanese government predicted that a rise in social security spending will stand at about 350 billion yen (US$3.2 billion), revised down from the earlier estimate of about 480 billion yen due to cuts on national health insurance outlays.

The country's defense budget hit a record high of 5.34 trillion yen (US$48.77 billion) for the seventh consecutive year as Japan attempts to increase its capabilities in new fields such as cyberspace and outer space. Spending on national security includes 33.5 billion yen (US$310 million) for the development of standoff missiles.

Among the policy spending, 5 trillion yen (US$45.67 billion) is earmarked for reserve funds to support the health care system and economy. This amount is could be spent without further approval for the diet. So far, the Japanese government has used the virus reserve funds to financially assist restaurants and bars that have complied with requests to close early to curb the COVID-19 pandemic. The reserve funds have also been allocated to hospitals that dedicate beds to COVID-19 patients.

Budget for ODA have also increased for 6 consecutive years. In 2021, Japanese government wishes to spend 568 billion yen for ODA, which is 7 billion yen higher than that of 2020. With the aim to achieve international containment of the Covid-19, Japanese ODA will focus on health sector.

To finance the budget for fiscal 2021, new bond issuances will amount to 43.60 trillion yen (US$398 billion), increasing 11.04 trillion Yen (US$100.8 billion) from that of 2020.

With tax revenues expected to plunge sharply due to the COVID-19 impact, Japan's debt dependency ratio will rise to 40.9 percent compared to the previous year's 31.7 percent.

Before that, Japan’s public debt has always been among the highest in the world considering debt/GDP ratio, which have stood at well over 200% of GDP for more than 10 years. However, Japan manages to keep itself away from default due to the fact that most of its public debt is being financed by its central bank or its citizen at an ultra-low (or even negative) interest rate.