Home > News
  print button email button

Friday, Aug. 29, 2008

Debt-servicing costs swell next year's budget

Staff writer

Ballooning debt-servicing costs will raise next year's general account budget to ¥86.13 trillion on a request basis, a 3.7 percent rise from this year, Finance Ministry officials said Thursday.

The total size of this year's requests by ministries and agencies is second only to fiscal 2004, when the sum came to ¥86.45 trillion.

Last year, they asked for ¥85.71 trillion for this year's budget, although this was eventually trimmed to ¥83.06 trillion.

This year's figure will no doubt be cut over the next several months after the Finance Ministry examines individual requests and projects. In December, the ministry will map out a draft budget for the fiscal year, which begins April 1.

Debt-servicing costs are expected to be a record ¥22.44 trillion, up from ¥20.16 trillion earmarked for the current fiscal year, due to rising interest rates. The Finance Ministry's estimate for the long-term interest rate is at 2.7 percent, a rise from this year's 2.0 percent.

"The rising balance of government bonds is causing the budget to expand," a senior Finance Ministry official said.

Interest payments are expected to rise to about ¥10.7 trillion, up ¥1.33 trillion from this year's initial budget, the official said.

Government debt climbed to ¥553.3 trillion in fiscal 2008, 10 times annual tax revenues. The figure breaks down to ¥4.3 million per person in Japan.

Requests under the heading of core policy-related general expenditures are expected to rise 1.18 percent to about ¥47.84 trillion, while subsidies sought by local governments will total about ¥15.85 trillion, up 1.5 percent.

Increased spending on social security is also a headache for the Finance Ministry, which wants the other ministries to slash their spending by 2 percent.

Meanwhile, the Finance Ministry also plans a 1.4 percent cut next year to ¥13.67 trillion for the government's fiscal investment and loan program — the lowest total in 32 years. It would also marked the 10th straight year of reductions.

After peaking in 1996 at ¥40.54 trillion, the program, known as "zaito," once dubbed "the second budget" due to its enormous size, has gradually been scaled down by privatization and other efforts to streamline government-affiliated bodies and make them more market-oriented.

Zaito involves long-term projects, including road construction and support for small and midsize firms. It is financed mainly by bonds issued by government-affiliated bodies that undertake such projects.

We welcome your opinions. Click to send a message to the editor.

The Japan Times

Article 2 of 7 in Business news

Previous Next

Back to Top

About us |  Work for us |  Contact us |  Privacy policy |  Link policy |  Registration FAQ
Advertise in japantimes.co.jp.
This site has been optimized for modern browsers. Please make sure that Javascript is enabled in your browser's preferences.
The Japan Times Ltd. All rights reserved.