By Takaya Yamaguchi and Tetsushi Kajimoto
TOKYO (Reuters) -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 lacklustre economy.
Decades of stop-start fiscal spending and reform have left Japan with the industrial world’s heaviest public debt burden – double the size of its economic output. It is now fighting to achieve an even tougher goal of a balanced budget, excluding new bond sales and debt-servicing costs, by the fiscal year ending in March 2026.
Tax revenue for fiscal 2024-25 is estimated to come to 69.6 trillion yen, slightly overshooting this year’s estimate at 69.4 trillion yen, which would be a record amount if corporate profits recover and wage growth spreads.
Next year the government plans to forego paying into a to boost defence spending in the first of several years and reduce its 5 trillion yen emergency budget so as not to squeeze its annual spending.
The government plans to trim new bond issuance for a third straight year, counting on tax revenue growth and spending cuts. Fresh borrowing would stand at around 34.9 trillion yen, down from 35.6 trillion yen for this year’s initial amount.
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 next fiscal year starting in April.
($1 = 143.4200 yen)
(Editing by Hugh Lawson)