Japan unveils 82.18 trln yen FY05 budget; 1st drop in bond issuance in 4 yrs
Monday, December 20, 2004 3:50:59 AM
afxpress.com
TOKYO (XFN-ASIA) - Finance Minster Sadakazu Tanigaki has presented to the Cabinet a budget for next year of 82.18 trln yen, up just 72 bln yen from the initial budget for this year
The budget for fiscal 2005, which starts next April 1, projects a decline in bond issuance and in discretionary spending. Yet overall spending will still rise fractionally due to an increase in debt-servicing costs
The draft budget provides 47.28 trln yen for general account spending, or discretionary spending on defense, education, health services and other areas where the amount can be raised or lowered by political agreement. The budgeted amount represents the first decline in three years
The budget calls for the sale of 34.39 trln yen of new bonds, a slight decline for the first time in four years. Tax revenue is estimated to increase because of the economic recovery and the plan to halve tax breaks introduced in 1999. As a result, the ratio of tax revenue to total revenue will rise to 53.5 pct from 50.8 pct in the initial budget for fiscal 2004
Some 41.8 pct of the budget will be funded through debt, down from 44.6 pct in the current year
Debt-servicing costs are budgeted at 18.44 trln yen, representing one-fifth of overall spending and up 873.7 bln yen from the amount in the initial budget for this year
Japanese central government debt by the end of fiscal 2005 is estimated to rise to a record 602 trln yen, including construction government bonds sold to finance specific public works projects
The ratio of central government debt to GDP stands at 151.2 pct, the highest among OECD countries
Combined central and local government debt is projected to total 774 trln yen by March 2006. "Although there is a lot more left for us to do to consolidate government spending, on the whole we are able to show a basic direction toward reduced spending," Tanigaki said
Tanigaki highlighted three accomplishments -- a decline in bond issuance, the decline in general account spending, and the resulting improvement in the primary balance of the general account
The primary budget deficit foreseen in the fiscal 2005 budget is 15.95 trln yen, 3.07 trln yen less than in the initial budget for fiscal 2004. It would mean a second straight year of decline in the deficit
Spending on social security is set to rise 2.9 pct due to the nation's aging population, whereas spending on foreign aid, on public works and on defense are all set to decline
Spending on defense is to decline for the third straight year, by 1.0 pct to 4.86 trln yen -- part of which is set to be spent on the introduction for the ballistic missile defense system
Reflecting disputes with China over the investigation of the sea near Japan for natural resources, the budget for prospecting on the continental shelf will increase to 6.7 bln yen from 5.4 bln yen
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