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The
planned budget poses a challenge to Prime Minister Shinzo Abe's
efforts to streamline spending and proceed with fiscal
consolidation to rein in the industrial world's heaviest debt
burden.
It presents a test of the premier's resolve to achieve a primary
budget surplus - excluding debt servicing and new bond sales -
by fiscal 2020, which is seen as difficult.
The general-account budget spending for the fiscal year to begin
on April 1 marks an increase from this year's 96.7 trillion yen,
the draft showed, reflecting snowballing social security
spending to fund the cost of services for Japan's fast-ageing
population.
The government aims to approve the fiscal 2017 budget draft at a
cabinet meeting on Thursday, along with a small third extra
budget for the current fiscal year.
Tax revenue for the fiscal 2017 will be forecast at 57.71
trillion yen, up just 110 billion yen from this year, the draft
showed.
The government plans to sell new bonds worth 34.37 trillion yen,
which would be a nine-year low and slightly below this year's
initially-planned 34.43 trillion yen.
To curb new bond issuance, the government will tap bigger
non-tax revenue of 5.37 trillion yen, compared with this fiscal
year's 4.69 trillion yen, the draft showed.
The government is also set to reduce debt-servicing costs,
thanks to rock-bottom interest rates under the Bank of Japan's
yield curve control policy.
($1 = 117.32 yen)
(Writing by Tetsushi Kajimoto; Editing by Chang-Ran Kim and
Richard Borsuk)
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