TOKYO: This owes to expected growth in tax revenues as the economic recovery lifts corporate earnings and wages. The government maintained its downbeat assessment of exports, saying shipments are weak due to China’s economic slowdown and worries about emerging markets. The government plans to increase the issuance of 40-year Japanese government bonds by 400 billion yen.
Japan’s annualized GDP expanded 1 percent in the quarter ended September 30 from the previous period, according to revised figures, avoiding a recession as previously thought.
Aso also said tax revenue in 2016 is estimated at a 25-year high of 57.6 trillion yen ($476.3 billion). Tax revenue is projected to rise to ￥57.6 trillion, the most since fiscal 1998, while new bond issuance is forecast to fall to ￥34.4 trillion, the lowest since fiscal 2009.
Deficit-financing bonds are seen as a barometer of fiscal discipline because they are issued to fill budget gaps. Japanese government bonds were firm on Monday in line with slumping equities, while the longer zones extended gains made on Friday after the Bank of Japan pledged to increase the average remaining maturity of its JGB portfolio. This will bring debt-servicing costs – interest payments and debt redemption – to 23.6 trillion yen, up 150 billion yen from this fiscal year, the sources said.
Under a temporary provision agreed upon by the ruling and main opposition parties in 2012, deficit-financing bills have been allowed to be issued without special legislation for three years through the current fiscal year that ends in March.
Sources close to the matter said that the draft budget is likely to jump to 96.7 trillion yen, from initial estimates of around 96.3 trillion yen, as costs associated with social welfare swell, as the population here continues to rapidly age as well as shrink.
This is up a touch from the 96.3 billion yen spending set for the current year’s initial budget. That would be the lowest since fiscal 2008 when fresh borrowing stood at 33.2 trillion yen, just before the global financial crisis hit the world´s third-largest economy and dented tax revenue.
