By Takaya Yamaguchi and Tetsushi Kajimoto
TOKYO (Reuters) – Japan’s government is set to have next fiscal year’s annual budget depend 31.1% on debt, a draft of the fiscal 2023/24 budget reviewed by Reuters showed on Thursday, highlighting the struggle for the heavily indebted government to make ends meet.
In a show of will to rectify the debt structure, however, the government would reduce the debt-dependency ratio from this fiscal year’s 34.3%, thanks to record tax revenue on the back of exporters who saw the value of exports grow thanks to weak yen.
Hefty tax revenue 69.44 trillion yen would also help curb new debt issuance to 35.62 trillion yen, down by 1.3 trillion yen.
Despite efforts to curb debt, Japan’s budget plan would come under renewed pressure from a plan to double the defence outlay to 2% of Japan’s GDP by 2027, while welfare costs to service the fast ageing population would further strain dire public finances.
By sectors, social security spending for the fiscal 2023/24 would be estimated at 36.89 trillion yen, while defence-related outlay 6.79 trillion yen, up 1.42 trillion yen from fiscal 2022.
The annual draft budget spending plan worth 114.38 trillion yen is expected to be approved by the cabinet on Friday, along with government bond issuance plan, sources said.
(Reporting by Tetsushi Kajimoto and Takaya Yamaguchi; Editing by Toby Chopra)
