|Japan sets more defense outlays in record US$922b budget
Japan approved its biggest budget today, as an improving economy and a sales tax increase made room for more defense spending and the first step towards achieving a balanced budget.
Prime Minister Shinzo Abe's cabinet rubber-stamped a plan that outlined spending 95.88 trillion yen (US$922 billion) in the year from April 2014, up from 92.61 trillion yen the previous year.
This was the largest in Japan's history due to changes in accounting rules and a sales tax increase, which will rise from 5 percent to 8 percent on April 1.
The lion's share of the extra revenue is earmarked for spending on snow-balling medical fees and other social welfare costs.
Even so, the projected primary balance deficit – the shortfall between what the government gets and what it spends on everything apart from debt-servicing – is expected to shrink by 5.2 trillion yen to 18.0 trillion.
That means Japan's national debt will continue to rise, albeit at a slower pace.
The government's official policy is that Japan's primary balance should be in surplus by 2020, although most analysts expect that target to be missed.
Military spending will increase for the second consecutive year.
Overall it will rise 2.8 percent to 4.88 trillion yen, accounting for 5.1 percent of the whole budget. The bulk of the increase reflects salary increases with just 0.8 percent set aside for new fighter jets, drones and a new amphibious unit.