Japan's top parliamentary committee approved the government's initial US$940 billion budget plan for the next fiscal year, setting the stage for the budget's full pass through the legislature in March.
Quoting Reuters on Monday (21/2), Japanese Prime Minister Fumio Kishida is counting on the budget to pull Japan's economy out of the Covid-19-induced sluggishness with the economy set to slow to a crawl this quarter.
The budget for the new fiscal year starting in April 2022 of 107.6 trillion yen (US$936.14 billion) is Japan's largest initial spending plan.
The expansionary fiscal package will also add to the burden of the world's heaviest debt burden, which is more than twice the size of Japan's US$5 trillion economy.
The budget was approved on Monday by ruling party lawmakers on the lower house budget committee. It will be voted on Tuesday in plenary, as agreed by the ruling bloc and the opposition.
Given the majority of the ruling bloc in both chambers of parliament, the budget bill will be passed 30 days after being sent to the upper house.
This marks the fastest budget enactment since 1999.
Kishida has pledged to bring the main budget, which excludes new bond sales and debt servicing costs, into a surplus by fiscal 2025, while he faces pressure within his ruling Liberal Democratic Party (LDP) to spend more before July's upper house election.
The first annual budget drawn up under Kishida's cabinet follows an additional 36 trillion yen in spending for this fiscal year as he has pledged to implement unlimited spending over a 16-month period to keep the economy afloat.
Bigger spending means weaker fiscal discipline among policymakers who are relying on the Bank of Japan's ultra-loose monetary policy to keep borrowing costs low, analysts said.
The budget includes 5 trillion yen for Covid-19 emergency costs, a record 5.37 trillion defense spending, 36.3 trillion yen in welfare costs and 24.3 trillion yen for debt payments that account for more than half of annual spending.
($1 = 114.9400 yen)
