JAPAN - The government's fiscal 2014 budget, which took into consideration the planned consumption tax hike in April, has two goals-underpinning the nation's economy and restoring fiscal health by reducing new government bond issuance.
An expected increase in tax revenues from the consumption tax hike will be spent on improving social welfare, such as child-rearing assistance.
The government plans to increase financial aid to day care centers for children so that 130,000 more children will be accepted by the centers. The government aims to reduce the number of children on the centers' waiting lists and increase payouts to parents who take child-rearing leave from work.
For people suffering from intractable diseases, the percentage of their own financial burden from medical treatments will be lowered from the current 30 per cent to 20 per cent, and the upper limit of their own payments will be ¥30,000 (S$360) a month for adults and ¥15,000 for children.
Prime Minister Shinzo Abe has promised to "achieve economic reconstruction and restore fiscal health simultaneously."
In the fiscal 2014 budget, the amount of newly issued government bonds is reduced, and priorities in expenditure are placed mainly on public works and assistance to child-rearing. This stance appears to be in line with Abe's pledge.
In fiscal 2014, the government will not need to issue stopgap bonds to cover shortages in funds to finance basic public pensions. In fiscal 2013, ¥2.6 trillion worth of such bonds were issued. The bonds were not included in the amount of newly issued government bonds from the beginning.
Including cuts in government bond issuance by ¥1.6 trillion, simple calculation shows the total amount of government bond issuance will fall by ¥4.2 trillion.
Despite the reduction, the government did not need to make ends meet by utilizing reserves or surpluses in special government accounts.
In expenditures, the total amount of funds allocated to public works will increase by ¥680 billion, or 12.9 per cent, from the initial budget for fiscal 2013 as many in the ruling parties strongly demanded the increase.
Though a special account for the maintenance and repair of roads was integrated into the general account and about ¥620 billion in the general account was raised as a result, public works budgets will rise by only 1.9 per cent.
Considering that more than ¥1 trillion was earmarked earlier than scheduled in the fiscal 2013 supplementary budget, the actual amount can be viewed as a huge increase.