The government's draft budget for fiscal 2022 is likely to feature total spending of about 107.6 trillion yen, setting a record high for the 10th consecutive year.
About 1 trillion yen more than the initial level for this fiscal year, the 2022 figure is set to exceed 100 trillion yen for the fourth consecutive year.
Record-high social security costs -- such as pension, medical and nursing care expenses -- are a major factor. However, tax revenue is projected to rise, so new government bond issuances will drop for the first time in two years to about 36.93 trillion yen.
The draft budget for fiscal 2022, which starts in April, will be approved by the Cabinet on Friday and submitted to the Diet in January.
General expenditures will be about 67.37 trillion yen. Of this, social security costs will soak up 36.27 trillion yen. This marks an increase of about 440 billion yen from fiscal 2021, due to a natural rise in spending as Japan's population gets older.
The defense budget is projected to climb to a record-high 5.37 trillion yen, reflecting concerns over issues such as China's military buildup.
Mirroring fiscal 2021 spending, 5 trillion yen has been set aside for the coronavirus pandemic response.
Local allocation tax grants, which are a key source of funds for local governments, will remain basically unchanged at 15.88 trillion yen. National debt service expenditures, which are used for interest payments or repayments of previously issued government bonds, are forecast to rise by 580 billion yen to 24.34 trillion yen.
As for government revenue, tax receipts are projected to be record high for an initial budget at about 65.24 trillion yen. The government estimated revenue from consumption, income and corporate tax will all grow because of progress made in efforts to balance pandemic measures and economic activity.
Finance Minister Shunichi Suzuki met with ministers overseeing relevant ministries and agencies Wednesday to discuss the draft budget.
During talks with Land, Infrastructure, Transport and Tourism Minister Tetsuo Saito, it was agreed that 50 billion yen would be earmarked for establishing a system that supports local government efforts to boost pedestrian safety, such as by installing guardrails and improving pedestrian paths.
The move was prompted by an accident in June, when a truck driven by a man under the influence of alcohol hit a group of children as they were walking home from school in Yachimata, Chiba Prefecture, killing two of them and injuring three others.
Suzuki and Environment Minister Tsuyoshi Yamaguchi also agreed to set up new subsidies of 20 billion yen to support local governments willingly getting behind projects to reduce carbon emissions.
Regarding fiscal investment and loan programs, under which the government raises funds and provides low-interest loans for projects needed for policy purposes, 18.88 trillion yen has been earmarked.
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