1st LD: Japan's Cabinet approves record-high budget plan for FY 2018, defense spending swells

TOKYO, Dec. 22 (Xinhua) -- Japan's Cabinet on Friday approved a record-high budget plan for fiscal 2018, with provisions made to address Japan's skyrocketing social security costs to support the rising numbers of seniors and significant allocations made for defense spending.

The budget plan, a record-high for a sixth successive year, amounts to 97.71 trillion yen (861.80 billion U.S. dollars), outlines 32.97 trillion yen (290.79 billion U.S. dollars) in allocations for spending on social security and 5.19 trillion yen (45.77 billion U.S. dollars) on defense spending.

The government's plans for both social security and defense spending have increased to become the highest on record in Japan.

In the general account, 74.41 trillion yen (656.29 billion U.S. dollars) has been allocated for policy spending, with the government continuing to cap its year-on-year social security increases at 500 billion yen (4.41 billion U.S. dollars).

The government has estimated that the revenue it will collect from taxes in the period will increase to 59.08 trillion yen (521.08 billion U.S. dollars), marking the highest in 27 years, with the shortfall being made up by bond issuance to the tune of 33.69 trillion yen (297.14 billion U.S. dollars).

Japan is still struggling to get its fiscal house in order and while its planned bond issuance has been reduced by 2 percent and lowered for 8 straight years in the latest budget plan, Japan still has a public debt level globally never seen before at more than double the size of its 5 trillion U.S. dollars economy.

The government, while recognizing its dependence on debt, has reduced the ratio of debt to revenue from 35.3 percent in fiscal 2017 to 34.5 percent in fiscal 2018.

"We will continue to aim for fiscal rehabilitation," Finance Minister Taro Aso told a press briefing after a Cabinet meeting, adding that how the government plans to achieve a surplus in the primary balance will be revealed as early as possible next year.

The current budget plan is the first since Japanese Prime Minister Shinzo Abe, in essence, abandoned his target of achieving a primary budget surplus by fiscal 2020 by opting to raise spending on child welfare and education.

From the 5.19 trillion yen (45.77 billion U.S. dollars) allocation for defense spending, a record-high under the Abe administration, some 730 million yen (6.43 million U.S. dollars) will be used to prepare for the introduction of the U.S.-developed land-based "Aegis Ashore" missile defense system.

On Tuesday, the Japanese government formally decided to introduce two Aegis Ashore systems to cover the entire nation that will become operational by fiscal 2023. Enditem