Japan’s centre-left government on Friday approved a record 1.1-trillion-dollar budget for next fiscal year that aims to boost the flagging economy but adds to a mountain of public debt.
Japanese Prime Minister Naoto Kan’s cabinet backed the 92.41 trillion yen draft budget for fiscal 2011 which starts on April 1.
To finance the massive outlays, Japan aims to issue fresh bonds worth 44.3 trillion yen — meaning that for the second year in a row new debt will be bigger than tax revenue, projected to raise just short of 41 trillion yen.
“I think it is not a normal picture,” said Banri Kaieda, minister in charge of economic and fiscal policy, commenting on the state of public finances. “We must correct it as soon as possible.”
Japan’s public debt is already estimated at about 200 per cent of gross domestic product, the highest level among industrialised nations.
The new budget is slightly larger than the initial budget for fiscal 2010, which stood at 92.30 trillion yen.
It will finance some of the spending pledges made by Kan’s Democratic Party of Japan (DPJ) — which ended more than half a century of near-continuous conservative rule last year — such as cash for families with young children.
Finance Minister Yoshihiko Noda defended the draft, which includes jobs and growth programmes to sustain the ailing Asian economic giant, which expects growth to slow to 1.5 per cent in 2011 from 3.1 per cent in 2010.