Japan’s Budget Allocation sees Massive Drop in 12 years

Japan's government aims to reduce its budget next fiscal year for the first time in 12 years, highlighting concerns over the massive public debt of the world's third-largest economy, a draft of the 2024-25 budget reviewed by Reuters showed. The budget is estimated to come to 112.1 trillion yen ($782 billion), compared with the initial 114.4 trillion yen set out in this fiscal year's budget, reflecting the government's will to restore the tattered public finances and revive a lackluster economy.

Tax revenue is estimated to come to 69.6 trillion yen, slightly overshooting this year's estimate, which would help keep Japanese government bond (JGB) issues next fiscal year relatively low at around 34.9 trillion yen, the draft showed. Finance ministry officials were not immediately available for comment. The budget draft will be compiled on Friday before being sent to parliament for debate and approval by the start of the next fiscal year, starting in April.

The assumed interest rates stood at 1.8% in fiscal 2013 and were lowered in stages to 1.1% in fiscal 2017, about the time when the central bank adopted its yield curve control policy, capping the 10-year bond yield around zero.