Japan creeps towards fiscal balance

Friday, January 16, 2015

Significance

Expenditures at 96.3 trillion yen (826 billion dollars) will be the highest ever, with almost one-quarter allocated to servicing the government's debt. However, the deficit is scheduled to fall because of higher revenues. The budget plans convey economic and political messages.

Impacts

  • Last year's pain from the increased consumption tax will yield higher revenues and lower deficits.
  • Monetary easing that pushed down the yen will boost corporate profits from foreign sales and expand tax revenues.
  • Sales of government-held shares in former public corporations could generate substantial one-time revenues if politics allow it.
  • Higher defence spending, while cutting education and science, reveals some of Abe's priorities.
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