TOKYO: The Japanese government Friday adopted a draft supplementary budget for fiscal 2024 with 13,943.3 trillion yen in general-account spending, mainly to fund a comprehensive economic package.
It is the first extra budget drafted under the administration of Prime Minister Shigeru Ishiba and is larger than the supplementary budget of the previous fiscal year.
Nearly half of the funding will be sourced from the issuance of new Japanese government bonds, further exacerbating the country’s fiscal situation.
Ishiba said in the campaign for last month’s election for the House of Representatives, the all-important lower chamber of the Diet, or Japan’s parliament, that he would seek to enact a supplementary budget larger than the 13,199.2-trillion-yen supplementary budget of the previous fiscal year.
The government plans to submit the draft to the current extraordinary Diet session early next month for enactment within this year.
Of the total spending in the draft, 13,931 billion yen will go to the economic package, including 5,750.5 billion yen for the growth of the Japanese and local economies, 3,389.7 billion yen to combat inflation and 4,790.9 billion yen for ensuring the safety and security of citizens, including aid for areas affected by natural disasters in the Noto Peninsula, central Japan.
New JGB issuances will cover 6.69 trillion yen of funding. Although the government’s tax revenues are projected to exceed the previous forecast by 3,827 billion yen to reach a record high in fiscal 2024, this is not enough to finance the spending.
The government plans to earmark 1,090.8 billion yen for special grants to local governments for the fight against inflation, including a benefits program for low-income households suffering from high prices. In the program, households exempted from residential tax payments will be given 30,000 yen each, plus an additional 20,000 yen per child.
Also planned are 1,032.4 billion yen for subsidies to curb gasoline prices and 319.4 billion yen for aid to electricity and city gas consumers, which will be resumed for three months from January next year.
Around 1.6 trillion yen, including money from existing funds, will be secured under the budget as part of the government’s plan to establish a system to provide public assistance of over 10 trillion yen to semiconductor- and artificial intelligence-related industries through fiscal 2030.
Ishiba’s signature regional revitalization 2.0 concept will get 1,840.6 billion yen under the budget.
The draft budget is nearly comparable in size to combined supplementary budgets adopted in the aftermath of a huge earthquake and tsunami that struck northeastern Japan in March 2011.
“We will not abandon our commitment to fiscal consolidation and will continue efforts such as spending reform,” Finance Minister Katsunobu Kato told a press conference.
The ruling Liberal Democratic Party and its coalition partner, Komeito, lost their majority in last month’s Lower House election.
The government hopes to overcome this by stating in its economic package that it will consider raising the minimum annual taxable income and reviewing automobile-related taxes including gasoline tax, both sought by the opposition Democratic Party for the People, which boosted its presence in the election.
Still, it is uncertain whether the budget can be passed without any hiccups, as opposition parties may push for revisions during Diet deliberations.
JIJI Press