Japan’s Cabinet has approved a draft budget for the next fiscal year starting April. It marks a record high of 122.3 trillion yen, or about 780 billion dollars.
The draft budget endorsed on Friday is up more than 7 trillion yen from the initial budget for the current fiscal year, which was an all-time high at the time.
Social security spending will top 39 trillion yen in response to Japan’s aging society and a hike in medical service fees.
The draft budget increases defense spending to 8.9 trillion yen in response to the government’s plan to fundamentally reinforce the country’s defense capabilities.
The fund earmarked for education and science projects will be increased to 6 trillion yen, partly to make high school tuition free.
An all-time high of about 31.2 trillion yen will be allocated to redeem or pay interest on government bonds. The rise in long-term interest rates is pushing up debt-servicing costs.
Meanwhile, tax revenues are projected to hit a record high of 83.7 trillion yen, as solid corporate earnings are expected to lead to wage hikes and higher income.
But the government will issue new bonds worth 29.5 trillion yen to make up for revenue shortfalls.
The government will submit the draft budget to the ordinary session of the Diet early next year and aims to swiftly get the bill passed.