TOKYO (AP) – Japan’s Cabinet approved a record 96.3 trillion yen ($814 billion) government budget for the coming fiscal year Wednesday after a tax hike to accommodate rising outlays for social security and defense.
Rising revenues following the sales tax increase last April enabled Prime Minister Shinzo Abe to raise spending without increasing the proportion financed by new government bonds, though the total national debt is still about twice the size of the economy.
Abe’s government must tread a fine line between spending enough to support growth and slowing the rise in debt, which is the highest, proportionately, among industrialized countries.
Passage of the budget approved Wednesday morning is almost certain since the ruling Liberal Democratic Party’s coalition with the small Komeito party has majorities in both houses of parliament.
As Japan’s population ages quickly, welfare costs are soaring. Social security spending will account for about a third of the budget. The economy is in recession but the government has forecast growth at 1.5 percent this year, after an estimated 0.5 percent contraction in 2014.