The Japanese government has approved a record level of spending of 92.4 trillion yen ($1.1tn; £711bn) for the next financial year. The cabinet agreed the draft budget, which must still be approved by parliament before 31 March.
Japan’s economy has suffered from deflation, a high yen that hurts exports, weak domestic demand and poor consumer confidence. The budget is aimed at boosting the economy, but adds to public debt. And some analysts have said the programme was unlikely to offer a big economic boost.
Debt-servicing costs and social security spending making up about 55% of the budget. Aid for local authorities accounts for another 18.2% of the budget. The remainder of the spending is split among defence, public works projects, education and technology.
The Democratic Party-led administration has promised to keep new borrowing at 44.3tn, in line with this year’s level.
But Japan was forced to raise spending due to higher debt servicing costs. Japan’s public debt is expected to reach 891tn yen, or 184% GDP, by the end of March 2012, the highest among developed nations. The government said tax revenues would be about 40.9tn yen in the next fiscal year, with another 7.2tn raised by raiding special reserves. The government has already reined in spending programmes including handouts to fund childcare.
