TOKYO -- Japan's cabinet on Friday signed off on a record 102.6 trillion yen ($938.8 billion) spending plan for the fiscal year through March 2021, as it scurries to fund the nation's rising medical bills and pensions, and put something away for a free child-care initiative.
It is the eighth straight year the world's third-largest economy has compiled a record initial general account budget and the second year in a row for the budget to exceed 100 trillion yen.
Social welfare spending, including money to make preschool education and day-care services free to parents of toddlers, will swell to around 35.8 trillion yen, up about 1.7 trillion yen from the previous fiscal year.
Military spending stands at 5.31 trillion yen. The proposed defense budget, including costs related to U.S. forces stationed in the country, marks an eighth consecutive year of spending hikes as Tokyo bolsters its space and cybersecurity defenses and prepares for potentialities like electromagnetic pulse attacks.
While revenue from the recently raised consumption tax is expected to be at a record high, it will not be enough to cover the state's ballooning budget; the shortfall will be financed by deficit-covering bonds.
The government is to submit the budget and related bills to the ordinary diet session that convenes in January, with the aim of enacting it by the end of the current fiscal year.
Japan's outlays are soaring for a number of reasons, but the biggest one is the need to take care of an aging population. Social security programs take up a third of total spending.
The biggest factor behind the budget's growth is social security payments, which make up a third of total spending. In the upcoming budget, social security spending growth, including money for medical and pension payments, will be capped at around 40 billion yen.
Earlier this month, the government set aside 1.8 trillion yen in a supplementary spending plan to prop up an economy that entered a funk after the consumption tax rate was raised to 10% from 8% in October.
And last December, in the wake of a series of natural disasters, the government decided to spend about 3.5 trillion yen to upgrade infrastructure over a three-year period. As part of that, about 1.14 trillion yen will be spent in fiscal 2020.
The government will also spend about 270 billion yen to support a cashless payments subsidy at smaller businesses. Total spending for the program, which ends in late June, will come to around 70 billion yen, about 30 billion yen more than the initial projection, made at the end of last year. More consumers than expected went cashless when the consumption tax was raised and subsidy offered.