Japan's Diet enacted Tuesday a record 107.60 trillion yen ($900 billion) budget for fiscal 2022 to finance measures against the coronavirus as well as rising social security and national defense costs.
The House of Councillors passed the budget for the year starting on April 1, following its approval by the House of Representatives in late February. It is the third-earliest enactment of an initial budget in Japan's postwar era.
But the focus is already shifting to a possible economic stimulus and how to finance it in the face of rising fuel costs and commodity prices after Russia's invasion of Ukraine.
"By implementing the budget swiftly and responding to the surging prices of crude oil, raw materials and food, we aim to realize revitalization of the Japanese economy," Prime Minister Fumio Kishida told reporters after the enactment.
Asked if he has any specific ideas about a fresh stimulus, including a proposal floated within the ruling coalition to provide 5,000 yen to each pensioner, Kishida said the government will carefully monitor economic conditions as it weighs its options.
The general-account budget for the upcoming fiscal year is at a record level for the 10th straight year.
In the largest-ever spending on social security, 36.27 trillion yen has been allocated to address Japan's rapidly aging population. The sum is up from 35.83 trillion yen in the previous year, accounting for over a third of total expenditure.
Spending on defense totaled 5.40 trillion yen, also a record, as Japan aims to develop new technologies in response to China's military expansion and to counter the North Korean nuclear and missile threat.
To deal with the pandemic, the government set aside 5 trillion yen as reserve funds for future responses, the same amount dedicated in fiscal 2021. The funds can be spent without Diet approval.
In addition to Kishida's Liberal Democratic Party and its junior coalition partner Komeito, which control both houses of parliament, the budget was also backed by the opposition Democratic Party for the People.
DPP leader Yuichiro Tamaki said earlier the small opposition party supports the budget because Kishida promised to consider activating a "trigger clause" that would temporarily cut gasoline taxes amid surging crude oil prices.
The government expects record-high tax revenue of 65.24 trillion yen, as the domestic economy is expected to continue recovering from a pandemic-triggered slump.
Kishida has said the government is committed to achieving a primary balance surplus by 2025, but it may take longer to achieve the goal due to the nation's high dependence on borrowing to finance expenditure.
The primary balance refers to tax revenue minus expenses other than debt-servicing costs. Japan's fiscal health is already the worst among major developed countries.
For the fiscal 2022 budget, the new bond issuance will be 36.93 trillion yen, down from 43.60 trillion yen in the previous year's initial budget. For debt-servicing costs, 24.34 trillion yen is allocated, up from 23.76 trillion yen a year earlier.
