Japan's FY15 budget to hit record S$1.09 trillion

The government's general account budget for fiscal 2015 will amount to about ¥96.3 trillion, according to a basic outline of the draft budget that was agreed upon at ministerial meetings Monday.

The figure, which is ¥500 billion (S$5.6 billion) more than the fiscal 2014 initial budget, is set to be the highest ever for a general account budget.

Newly issued government bonds, which represent debts held by the state, will total about ¥36.9 trillion in fiscal 2015.

The rate of government debt versus total revenue is expected to be about 38 per cent. For the first time in six years, the figure is set to fall below 40 per cent on a preliminary budget basis.

Before the Cabinet makes its official decision on Wednesday, the government plans to hold final talks on the draft budget with the ruling parties.

The primary balance, which indicates the amount that the government can procure for policy measures without acquiring debt, is forecast to be about minus ¥13.4 trillion in fiscal 2015.

The government has set a target of halving the rate of the primary balance deficit versus the nation's gross domestic product from that recorded in fiscal 2010. The deficit figure includes the debts of local governments.

With the amount of new government bonds issued set to decline, the goal is likely to be achieved.

The government has predicted about ¥54.5 trillion in tax revenue. The figure is seen to be the highest in 24 years, following the ¥59.8 trillion posted in fiscal 1991, a year after the burst of the bubble economy.

The total amount of newly issued government bonds in fiscal 2015 is scheduled to be below ¥40 trillion for the first time in six years.

The rate of reliance on government bonds will fall by five percentage points from 43 per cent in fiscal 2014. However, the general tendency of debt reliance will remain fundamentally unchanged.

Among state expenditures, spending for services related to social security will amount to about ¥31.5 trillion, accounting for the largest portion of the total. The number is on track to exceed the ¥30 trillion mark for the second consecutive year.

The government plans to allocate ¥700 billion for measures related to the revitalisation of local communities and economies, such as measures to deal with population decline. The move would enable local governments to use a total of about ¥1 trillion, which includes local tax revenues.

Tax revenue allocations, which are granted to local governments, are set to be reduced to about ¥15.5 trillion, as local tax revenues are seen to surpass ¥40 trillion for the first time in seven years.