TOKYO – The Japanese government approved on Friday a record budget of 97.71 trillion yen ($862.1 billion) for 2018 with notable increases in defense and social security spending.
The draft budget for the next financial year, which begins in April 2018, is now awaiting approval by the Japanese parliament, government spokesperson Yoshihide Suga said in a press conference.
The budget includes Japan’s biggest defense spending of 5.19 trillion yen to boost ballistic missile defense capabilities in the face of repeated missile tests by North Korea this year, including two that flew over northern Japan.
The 1.3 percent per annum rise in defense budget is part of Prime Minister Shinzo Abe’s efforts not just to safeguard against the North Korean threat but also to counter China’s increasing military presence in the Pacific, and is the sixth annual increase since he took office in 2012.
The Defense budget includes 730 million yen to install a new US-built Aegis (anti-missile defense system) that will add to other interceptor devices Japan has already deployed on its territory.
The budget also allocated a record-high 74.41 trillion yen for policy spending in the general account, a large portion of which will cover social security expenses.
The budget also allocated 32.97 trillion toward the national pension system.
Japan expects its economy to grow at 1.8 percent growth and hopes to add about 59.8 trillion yen to its treasury in tax revenues, up 2.4 percent from the previous fiscal year.
To cover the revenue shortfall, Japan plans to issue debt bonds worth 33.69 trillion yen, down 2 percent interannually.
Japan, one of the developed countries with the highest public debt, has managed to reduce its debt dependency from 35.3 percent in 2017 to 34.5 percent in 2018.
With this budget, Abe gave up his goal of achieving a primary budget surplus by fiscal 2020, after deciding to increase state spending on child care and education, including a package of new social and economic stimulus measures.