January 12th, 2015
Econintersect: Japan's Prime Minister Shinzo Abe has proposed a record ¥96.3 trillion ($813 billion) budget for the next fiscal year starting 01 April 2015. This is up from the current budget of ¥95.9 trillion ($810 billion), an increase of 0.4%. An expected surge in tax revenues from the second year of the new 8% consumption tax in a strengthening economy and the accompanying higher corporate tax receipts are projected to reduce the government annual deficit by 10.6%, from ¥ 41.3 trillion to ¥36.9 trillion.
The 2015-16 fiscal year deficit will be, by Abe's projections, approximately 3% of GDP. To get this number, according to Reuters, he is excluding Japan's debt service payments (about ¥23.5 trillion, or about 64% of the deficit). This year the deficit will be about 8.5% of GDP including the debt service expenses (¥41.3 trillion deficit and GDP projected to be about ¥486 trillion - Fed Fred data base). Econintersect calculates that the deficit for next year, including the debt service expenses, will be about 7.5% of GDP - if GDP grows by 1.5% for that year (to about ¥493 trillion) - and 7.6% if GDP does not grow at all.
Note: Trading Economics has the 2014 deficit at 7.6% of GDP. In the text they identify this as the 2013 deficit (for the fiscal year ending 31 March 2014). This is less than the 8.5% calculated with data from other sources for the current fiscal year. If these numbers are all correct then Japan has had a serious degradation of the deficit for fiscal 2014 which ends in about 2 1/2 months (from 7.6% of GDP to 8.5%). This occurred for a year with a big tax increase on the first day of the fiscal year. So much for big tax increases to improve a fiscal budget, at least in this case.
- Japan readies record $800 billion 2015-16 budget: sources (Takaya Yamaguchi, Reuters, 11 January 2015)
- Japan GDP (Trading Economics. 12, January 2015)
- Japan Government Budget (Trading Economics. 12, January 2015)
- Gross Domestic Product for Japan (Fed Fred data base, 12 January 2015)