UPDATE1: Japan lower house OKs record 97.45 tril. yen budget for FY 2017

By The Associated Press

Japan’s House of Representatives approved Monday a record 97.45 trillion yen ($870 billion) draft budget for fiscal 2017 to finance ballooning social security costs and enhance its defence capabilities.

The initial budget for the year starting in April also features expenditure to invest in growth areas as the economy has been struggling to break out of chronic deflation.

The budget is certain to be enacted before the end of the current fiscal year on March 31, given that it will be automatically enacted 30 days after being sent to the upper house under the Constitution.

The House of Councillors is scheduled to start deliberating on the budget plan on Tuesday after it was approved by Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition partner Komeito in a majority vote at the lower house.

It is the first time since 2014 that an annual budget has cleared the lower house in February.

Japan faces the difficult challenge of ensuring economic growth and restoring fiscal health, which is the worst among developed countries.

Excluding debt-servicing costs, a record 73.93 trillion yen has been earmarked for policy spending in the general account.

Social security costs, including pensions and medical expenses, will increase to 32.47 trillion yen, accounting for roughly a third of the country’s total spending.

Marking the fifth straight yearly rise since Abe took office in 2012, defence spending will reach a record 5.13 trillion yen as Japan seeks to strengthen its response to China’s maritime assertiveness and North Korea’s missile development.

For fiscal 2017, tax revenue is estimated at 57.71 trillion yen, up 0.2 per cent from the fiscal 2016 initial budget. The country’s dependence on debt has been slightly reduced, with new bond issuance at 34.37 trillion yen, down 62.2 billion yen from a year ago.

==Kyodo

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