By Tetsushi Kajimoto
TOKYO (Reuters) -Japan’s lower house of parliament passed on Tuesday a record 114.4 trillion yen ($839.3 billion) budget for the next fiscal year, a move that promises to further increase the industrial world’s heaviest debt burden.
The budget for the year beginning in April features record military spending to cope with threats from China and North Korea, as well as record welfare spending for a fast-ageing population.
Keeping stretched government finances under pressure, Prime Minister Fumio Kishida’s administration has also floated another plan to double childcare outlays in the hope of arresting declines in the country’s birthrate.
The budget’s passage in the powerful lower chamber makes approval by the upper house by March almost certain.
A flurry of big spending packages and ballooning social welfare costs have left Japan with a debt pile 263% the size of its economy – double the ratio for the United States and the highest among major economies.
Kishida’s controversial plan to double Japan’s defence spending to 2% of gross domestic product by 2027 contributed to a record 6.8 trillion yen increase in spending.
Japan must also grapple with rising long-term interest rates, which while still well below those in the U.S. and Europe, are testing the central bank’s ability to keep borrowing costs low in a country accustomed to decades of near zero inflation.
($1 = 136.3000 yen)
(Reporting by Tetsushi Kajimoto; Editing by Shri Navaratnam and Edwina Gibbs)
