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Economy

Japan ministries seek record budget for defense, disaster relief

Abe seeks to prepare nation for higher welfare costs and North Korea threat

Members of the Japan Self-Defense Forces search for survivors from a house damaged by a landslide in this week's Hokkaido earthquake.   © Reuters

TOKYO -- Japanese government ministries on Friday requested a record 102.8 trillion yen ($930 billion) in the budget for the fiscal year starting April, as Prime Minister Shinzo Abe seeks to get the nation ready for higher welfare costs, frequent natural disasters and possible threats from North Korea.

The infrastructure and transport ministry is among the departments seeking the most aggressive increases, as it seeks a 19% increase to fund infrastructure improvements to cope with natural disasters such as typhoons, torrential rains and earthquakes.

The ministry is also looking to beef up the capabilities of Japan's Coast Guard to patrol waters around islands claimed by Japan and China in the East China Sea, as well as illegal fishing by North Koreans in the Sea of Japan.

The Defense Ministry is seeking a 2.1% increase to 5.3 trillion yen so it can buy new ground-based Aegis Ashore radar missile tracking stations built by Lockheed Martin Corp. to deal with ballistic missile threats from North Korea.

With the influx of foreign workers into the country, the Justice Ministry is asking for more money to expand its immigration bureaucracy.

The total exceeds the current fiscal year's budget of 97.7 trillion yen, but it is expected to be trimmed down in interagency negotiations. A final budget draft will be produced by the end of the year.

Still, the total could end up exceeding 100 trillion yen for the first time. The Abe government continues to prioritize economic growth over fiscal consolidation despite the nation's towering debt -- Japan depends on borrowing for about a third of its spending, piling on to arrears that are more than twice the size of the nation's economy.

The announcement came as Abe began his bid for a third three-year term as the leader of the ruling Liberal Democratic Party. He is widely expected to win a party election this month that would put him on track to become the longest serving Japanese leader.

While the economy is ticking along, uncertainties lurk on the horizon as U.S. President Donald Trump continues to wage a trade war with China. He may also turn on Japan next.

In a call to James Freeman, assistant editor of The Wall Street Journal's editorial page, Trump said he was "still bothered by the terms of U.S. trade with Japan."

Such a move could put pressure on Tokyo to ramp up purchases of U.S. defense equipment.

The Abe government will has to plan for an increase in the consumption tax rate to 10% from 8% in October 2019. The prime minister has said that he will implement "bold countermeasures" to cushion the impact of the levy rise, and the size of the fiscal 2019 budget is expected to reflect such thinking.

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