TOKYO, Dec. 20 (Xinhua) -- Japan's budget for fiscal 2014 will reach a record-high 95.9 trillion yen (918.7 billion U.S. dollars) as public works spending, social security allocations and military expenditure increases, government officials said Friday.
The government under Prime Minister Shinzo Abe will confirm the final general-account budget for the year starting April on Dec. 24, but sources close to the matter confirmed next year's budget will far exceed this year's fiscal budget of 92.6 trillion yen, as the government focuses on reversing deflation here by augmenting spending to stimulate growth, as well as pumping in more funds to bolster military hardware.
According to the Ministry of Finance (MOF), owing to an expected economic uptick, tax revenues next year are estimated to swell to a seven-year high at around 50 trillion yen, with returns also set to get a boost from next April's consumption tax hike from 5 to 8 percent.
The ministry said that social security costs, in twine with rising pension and medical costs, will hit the 30 trillion yen mark for the first time since record keeping began, rising 1.4 percent from the current fiscal year and will account for around 40 percent of the total budget.
Public works projects involving the restoration and refurbishment of old buildings will cost 6 trillion yen, the government said, while defense expenditure will rise to almost 5 trillion yen as Japan beefs up its military under a new mid and long-term security and defense package announced earlier this week.
Japan's Minister of Defense Itsunori Onodera said Friday that defense spending will rise next year by 2.2 percent, marking the biggest rise in 18 years and the second straight year of increase.
Japan has allocated 4.78 trillion yen for defense spending in fiscal 2014 starting in April, with the figure provisionally approved by Japan's Minister of Finance Taro Aso at a meeting with Itsunori earlier in the day.
For the past 10 years ending in 2012, the Japanese government has consistently cut defense spending, but following Abe's rise to power a year ago, defense expenditure has risen 0.8 percent this fiscal year and will leap by 2.2 percent in 2014, as the prime minister looks to augment the Self Defense Force's array of hardware as the nation embarks on a new militaristic tack under Abe.
The defense ministry has played down the hike in spending and has said that due to a weaker yen, importing weapons equipment and technology will be more expensive.
In addition, 108.8 billion yen will be provided to those still displaced following the earthquake and tsunami-triggered nuclear disaster at the Daiichi nuclear power station in Fukushima prefecture, Reconstruction Minister Takumi Nemoto and Aso confirmed Friday.
Japan's Land, Infrastructure, Transport and Tourism Minister Akihiro Ota has also secured 1.08 trillion yen for disaster prevention measures in local municipalities, with the figure also green lit by Aso Friday.
The government has said that although policy spending will expand in fiscal 2014, the deficit in the primary base will retreat from this year by 5.2 billion yen to 18 trillion yen, with annual fiscal rehabilitation goals outlined in August, likely to be achieved without the need for further government bond issuance above the amount issued this year.
The government must improve its primary balance by 4 trillion yen in 2015 to stand any chance of keeping its pledge to reduce by half the ratio of the primary balance deficit to GDP and the government wishes to see the primary balance turned into surplus by 2020.
Japan, however, still has the highest public debt among any of the nations in the industrialized world at more than twice the size of its economy and has battled decades of deflation. Abe and the central bank have set about addressing these issues by rolling out wholesale fiscal stimulus measures, maintaining an ultra-low interest rates and easing monetary policy.
As the yen has weakened, the economy here has started to react, with the central bank being confident it can achieve the government's 2 percent inflation target in 2014.
The two buzzwords Abe has used in the compilation of the fiscal budget for 2014 to be confirmed next week are "fiscal consolidation" and "economic revitalization".