Roundup: Japan's Cabinet OKs record 814 bln dollars budget for FY 2015, heavy on social security, defense

Japan's Cabinet approved a record 96. 34 trillion yen (about 814 billion U.S. dollars) government budget for fiscal 2015 beginning in April to accommodate rising spending for social security and defense, local media reported Wednesday.

The budget draft, the third since Prime Minister Shinzo Abe took power, marks a rise from this fiscal year's initial 95.88 trillion yen, said Kyodo News Agency.

Rising revenues following the sales tax increase last April enabled Abe to raise spending without increasing the proportion financed by new government bonds, though the total national debt is still about twice the annual gross domestic product, the highest level in major industrialized countries.

According to the budget draft, Japan's policy spending will reach a record-high 72.89 trillion yen, up 2.79 trillion yen from the fiscal 2014 original budget, suggesting Abe's administration has failed to streamline expenditures, mainly those for social security programs.

As Japan's population ages quickly, social security spending, including swelling spending on pensions and medical costs, will rise 3.3 percent from the previous year to a record 31.53 trillion yen in fiscal 2015. The expenses, accounting for around 30 percent of the total spending, will exceed 30 trillion yen for the second straight year.

Defense expenditures will also climb 2.0 percent to a record 4. 98 trillion yen (42 billion dollars), up for the third consecutive year, as Abe aims to strengthen surveillance and defense capabilities of the country.

The increase mainly covers new equipment, including P-1 surveillance aircraft, F-35 fighter jets and amphibious vehicles for a new unit similar to the U.S. Marine Corps.

The fiscal 2015 budget also covers the cost of purchasing parts of "Global Hawk" drones, planned for deployment in 2019, two Aegis radar-equipped destroyers and missile defense system development with Washington.

Since Abe took office in 2012, Japan's defense budget has been on an uptrend and could top 5 trillion yen in fiscal 2016.

The prime minister favors a stronger role for Japan's military in the name of "active pacifism," while it is worth noting that the size of the country's defense budget, is an indication of " whether or not Japan can follow the path of peaceful development," Chinese Foreign Ministry spokesman Hong Lei said during a regular press conference on Wednesday.

Spending on public works projects, which the government views as having an immediate impact on the corporate sector, will stand at 5.971 trillion yen, with little change from the previous year.

The Cabinet plans to submit the draft budget to the Diet session to be convened later this month. Since Abe's Liberal Democratic Party and its coalition partner Komeito have majorities in both houses of the parliament, the passage of the budget is almost certain, said local media. Endi