Japan's lower house passes record budget, defense spending swells

TOKYO, Feb. 27 -- Japan's lower house of parliament on Monday approved a record draft budget for fiscal 2017, as the government grapples to finance rapidly swelling welfare costs to tackle the nation's demographic crisis and stagnant inflation, although continues to expand its controversial military spending.

The 97.45 trillion yen (870 billion U.S. dollars) budget will be enacted before the end of the current fiscal year on March 31, and its passage through the upper house of Japan's bicameral system of parliament is as good as guaranteed.

Thirty days after being sent to the upper house, the budget will be automatically enacted as per Japan's constitutional ordinance.

Japan is a nation that has been mired in deflationary pressure for decades, with various stimulus measures by the Bank of Japan and Prime Minister Shinzo Abe's numerous installments of his "Abenomics" aggressive economic polices, having negligible effects.

Growth areas remain slim in the world's third-largest economy and corporations who have managed to net profits are not increasing wages at a rate to encourage consumer spending, which accounts for 60 percent of Japan's GDP.

Japan's mainstay exports sector also lacks competitiveness due to the yen's recent strength, which has led to a production slump.

Public spending having gone awry for decades. Japan's fiscal health is allowed to deteriorate with no clear signs of major new growth sectors to pull Japan out of its economic slump, or concrete solutions to tackle the shrinking and aging population which is hollowing out both Japan's workforce and its consumers.

The country's debt has consequently swelled.

Public debt here stands at significantly more than double the size of Japan's economy and is the worst in the industrialized world.

Yet while social security costs will increase to 32.47 trillion yen under the new budget to tackle the nation's welfare issues, a third of the country's total spending. Defense spending, as leading economists have attested, is also inexplicably rising.

Defense spending has risen for the fifth straight year since Abe became prime mister for the second time in 2012, to an exorbitant 5.13 trillion yen.

The defense ministry's shopping list, which comprises next-generation military hardware, is largely at odds with Japan's pacifist constitution, which bans Japan from maintaining military potential, or from using force as a means of settling international disputes. It also decrees that the Japanese people will forever renounce war.

Policy spending in the general account is pegged at a record 73.93 trillion yen, with the amount excluding debt servicing costs.

The government has said it expects tax income to amount 57.71 trillion yen, and will issue fewer new bonds at 34.37 trillion yen. Enditem (1 U.S. dollar equals to 112.28 Yen)

(Source : news.xinhuanet.com)

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