Roundup: Japan's parliament passes record budget for FY 2015 aimed at revitalizing economy

Japan's parliament on Thursday enacted the nation's largest-ever budget of 96.34 trillion yen ( 803 billion U.S. dollars) for the fiscal year 2015, which started on April 1, targeted at revitalizing the economy and achieving fiscal rehabilitation without the need for fresh borrowing.

The enactment of the latest budget in the parliament's upper house was delayed due to last December's general election called by Prime Minister Shinzo Abe to seek public approval for deferring a second unpopular consumption tax hike from 2015 until 2017.

An interim budget was passed in the meantime to ensure the government remained liquid and the full budget was passed through the lower house of parliament on March 13, before being ratified by the upper house on Thursday.

Following the enactment of the record budget, Abe said that the government was now financially equipped to set about reviving local economies, particularly those still struggling four years after the devastating earthquake-triggered tsunami that pummeled Japan's eastern seaboard and sparked an ongoing nuclear crisis that continues to plague regions in Japan's northeast.

"We can now firmly proceed with measures to revive regional economies, rebuild disaster-hit areas, support raising children and tackle intractable diseases," the prime minister told reporters after the budget was passed.

Abe also said that he intended to make the benefits of the new budget felt all across Japan.

"We will make utmost efforts to send waves of economic recovery rippling all over the country," Abe said.

But the prime minister's remarks come against a backdrop of macroeconomic data showing that despite some corporations hiking wages recently, small and medium-sized businesses as well as households were still suffering from the effects of the government 's tax hike in April last year from 5 to 8 percent, with business investments slumping and household expenditure being squeezed. The tax hike also sent the nation into a technical recession.

Recent data released by the Bank of Japan (BOJ) has also revealed that the central bank and government's joint efforts towards achieving a 2 percent inflation target have stalled, with Japan's annual core consumer inflation rate sliding to zero in February, marking its lowest level in nearly two years.

The slump was largely due to the knock-on effects of the global oil glut, as a fall in oil prices continued to weigh on the economy, and economists have been speculating whether the BOJ will unveil fresh stimulus measures to keep its lofty reflation efforts in sight, although the central bank has held off thus far, despite weak inflation and economic growth in the last quarter being slower than expected.

The government, however, is adamant it can turn its primary balance into surplus by fiscal 2020, despite rising social security spending spiking to a new record at 31.53 trillion yen in fiscal 2015, as the nation's greying population continues to grow and commanders hefty portions of the government's budget, amounting to 3.3 percent more than fiscal 2014.

Defense spending has also been responsible for the latest budget swelling, as expenditures in this area will jump for a third successive year, by 2 percent to 4.98 trillion yen, as Abe sets about bolstering the Self-Defense Forces' capabilities.

But despite the ruling camp's significant clout in both chambers of parliament, calls from opposition parties have been rife for Abe to rein in unnecessary spending and curb, if not lower defense spending, as the nation is still facing a debt burden that remains the highest in the developed world at twice the size of Japan's 5 trillion yen economy. Endi