The government plans to set its second supplementary budget for fiscal 2016 at 4.114 trillion on a general-account basis, informed sources said. The extra budget will finance a 28.1-trillion stimulus package compiled earlier this month. Including an extra budget for a special account for reconstruction after the March 2011 disasters and other projects, the government's additional fiscal spending will total 4.522 trillion, the sources said. The government hopes to achieve economic growth led by private sector demand at a time when China and other emerging economies are slowing down and Britain's vote to leave the European Union has added to global economic risks. Partly to fund the general-account extra budget, the government will issue 2.75 trillion of so-called construction bonds that can be used only for public works projects and some other purposes, the sources said.
The government plans to earmark ¥3.2 trillion in spending under a planned supplementary budget for fiscal 2019 ending in March, sources said Thursday. The government is expected to adopt the extra budget on Friday. The extra budget will cover some 20 percent of the ¥13.2 trillion in fiscal spending included in the government's ¥26 trillion economic stimulus package adopted on Dec. 5. Under the extra budget, the government plans to spend ¥2.3 trillion on measures to enhance its disaster prevention capabilities, including by dredging rivers and strengthening levees. The government plans to use ¥900 billion on measures to mitigate the impact on small and midsize companies and farmers of the U.S.-China trade war and the Japan-U.S. trade agreement.
The Cabinet of Prime Minister Shinzo Abe on Thursday approved a record-high ¥97.45 trillion budget for fiscal 2017, as swelling social security costs moved Japan further away from its goal of reining in overall spending and restoring its tattered fiscal health. The budget for the year starting in April also features increased defense spending for the fifth straight year since Abe took office in 2012 and expenditures to rejuvenate the economy by investing in growth areas. Excluding debt-servicing costs, a record-high ¥73.93 trillion is earmarked for policy spending in the general account, with spending on social security comprising the largest portion of it. Tax revenue is expected to increase 0.2 percent to ¥57.71 trillion from the current year's initial budget in anticipation of the yen's weakening that would boost corporate earnings. It enables Japan to cut its dependence on debt, albeit slightly, to 35.3 percent from 35.6 percent in the fiscal 2016 initial budget.
The government will issue an additional ¥1.8 trillion ($15.2 billion) in bonds this fiscal year to make up for a shortfall in tax revenue and to help pay for a third extra budget, according to government sources. Reflecting sluggish corporate tax revenue, the government will cut its fiscal 2016 tax revenue estimate by ¥1.7 trillion to ¥55.9 trillion, the sources said. For the first time since fiscal 2009, the government has slashed its tax revenue estimate and been compelled to issue additional deficit-covering bonds in the middle of a fiscal year. The government had already increased its reliance on debt as it issued ¥2.75 trillion of bonds to pay for the second supplementary budget. The further bond issuance will bring the total debt issuance this fiscal year to about ¥39 trillion.
The House of Representatives on Friday approved another supplementary budget for fiscal 2016 ending March that will provide ¥622.5 billion ($5.4 billion) for disaster relief and defense projects. The third supplementary budget for fiscal 2016 includes ¥195.5 billion for areas like Hokkaido and Tohoku that were hit by typhoons and earthquakes last year, and ¥170.6 billion to bolster Japan's defenses from the threat of North Korean missiles. The Lower House approved the extra budget with support chiefly from the ruling Liberal Democratic Party, its coalition partner, Komeito, and opposition party Nippon Ishin no Kai. The ruling camp aims to pass the extra budget on Tuesday after discussions in the House of Councilors, the upper chamber. Since the government has cut ¥1.74 trillion from its original tax revenue estimate for fiscal 2016, it will issue ¥1.85 trillion in government bonds to make up for the shortfall.