Budget Keeps on Swelling

Cabinet headed by Prime Minister Shinzo Abe decided FY 2017 budget, which recorded the biggest amount of general accounting with ¥97.4 trillion. Trying to implement one of his biggest agenda, Abenomics, the budget accumulated expenditure for welfare, in addition to swollen defense budget. New issuance of national bond maintains its high level, occupying 35% of whole revenue. While stock market rallies these months, the government is still in search of resource of its budget.

Although Japanese economy looks like stable with regaining of ¥19,000 of Nikkei Average, the people do not realize their life to be comfortable. To earn good reputation from every level of Japanese society, Abe focused on welfare including medical care, nursery for old agers or supporting mothers with little children. Budget for social security marked new record of ¥22.4 trillion. But, spending on medical cost for aged people was reduced to the level lower than the request from Minister of Health, Labor and Welfare.

To his agenda called 100 Million Mobilization, Abe applied ¥2.9 trillion. It included payment for higher salary of experienced nurseries who were expected to contribute to his agenda by taking care of old parents or little kids of working women. The government will introduce beneficially scholarship with no need of repayment in FY 2017, which will be supporting 2,650 of college students with financial difficulty.

With fundamental concern on advance of China, defense budget increased by 1.4% from the previous year, amounting ¥5.1 trillion. The budget will be spent for reinforcing defense capability of small islands around Okinawa. Spending on building infrastructure was not showing major increase, in spite of devastation of consecutive storms in this summer damaging roads, railways and bridges. Subsidy for local governments increased by 1.9% with consideration of supporting local projects.

Although revenue of corporate tax was reduced with high value of Japanese yen this year, Ministry of Finance estimates that the income will be rising in FY 2017, because of current resurge of low-valued yen. Ministries other than MoF criticize the estimate as fabrication. The financial situation of Japanese government is still far from balancing revenue and expenditure.

FY 2017 budget shows how Abenomics depends on loans. While Abe appeals concentration on welfare, basic structure of expenditure has not changed from traditional money distribution of Liberal Democratic Party, focusing on pouring money into building infrastructure.