Japan Prime Minister Shinzo Abe Japan’s cabinet approved on Thursday a record $830 billion spending budget for fiscal 2017.
The budget which is 97.5 trillion yen (over N260 trillion), counts on low interest rates and a weak yen to limit borrowing.
The figure represents an increase of 733 billion yen and will cover the fiscal year starting from April 1.
The budget shows that Prime Minister Abe still struggles with cutting down spending.
According to Reuters, spending is a key to his ambitious aim of achieving a primary budget surplus – excluding debt servicing and new bond sales – by the fiscal 2020.
“This budget does not mark a shift away from reflationary policies. Chances are high for Abe to compile additional stimulus budgets later next year,” Toru Suehiro, senior market economist at Mizuho Securities, said.
Incoming U.S. President Donald Trump’s reflationary policies should encourage Abe to follow suit, and calls for more fiscal stimulus will increase given the possibility that the premier may call a snap general election next year, Suehiro added.
Finance Minister Taro Aso stressed that Abe will stick with reflationary policies with monetary easing and “flexible” fiscal spending.
“Abe cabinet is not pursuing austerity but we are aiming to balance (the budget) by expanding the economy,” Aso told reporters.
The Ministry of Finance said this budget was aimed at reviving the economy and achieving fiscal consolidation. But analysts say a thorough spending reform is needed to restore public finances.
The government’s plan to keep new bond issuance slightly below this year’s initially-planned 34.43 trillion yen assumes rosy tax income estimate that counts on a weak yen to boost corporate profits, and greater investment return from foreign reserves.
By Reuters
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