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) have 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. While its planned bond issuance has been reduced by 2 percent and lowered for the eighth straight year in the latest budget plan, the country still has a public debt level globally never seen before at more than double the size of its 5 trillion-U.S. dollar 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," Japan's Finance Minister Taro Aso told a press briefing after a Cabinet meeting Friday, adding that exactly 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 the government's 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. dollar) 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 government here formally decided to introduce two Aegis Ashore systems to cover the entire nation that will become operational by fiscal 2023.
Each system, developed by Lockheed Martin Corp., costs around 100 billion yen (882 million U.S. dollars), defense ministry officials said.
They added that the new systems installed at stationary sites in Japan would add a new layer of missile defense along with current sea and ground-based systems.
In addition, they said that the new systems would help to take the burden off the current Maritime Self-Defense Force's (MSDF) Aegis-equipped destroyers, installed with Standard Missile-3 interceptors, and the Air Self-Defense Force's (ASDF) ground-based Patriot Advanced Capability-3 interceptors (PAC-3).
The Defense Ministry decided against installing the U.S. Terminal High Altitude Area Defense system (THADD), owing to Aegis Ashore's cost effectiveness, among other determining factors, defense ministry officials said.
The allocations on defense spending marks the sixth consecutive year that the defense budget has risen, with spending increasing sharply since Abe retook office in 2012.
Economists and political pundits critical of the ever-increasing expenditure have highlighted the possibility that with Abe's push to revise the pacifist Constitution and further normalize Japan's military, such increases in military spending could further unsettle the region and trigger an unnecessary arms race.
They have suggested that some of the excessive funds would be better redirected into chipping away at public debt, further raising social welfare spending and stimulating economic growth drivers, among others, rather than using public funds to bolster the strength of a constitutionally unsound military.
According to the Organization for Economic Cooperation and Development (OECD) in its latest evaluation, Japan, with its debt the highest in the industrialized world, poses "a serious risk."