June 29, 2022

Japan’s Finance Ministry reported the government under its initial budget for fiscal 2022 will issue a total of 215.04 trillion yen ($1.9 trillion) worth of bonds. The amount saw such a deduction for the first time in three years, partly due to a record tax revenue is being anticipated due to the recovery of the pandemic-hit economy.

According to the ministry, since the government cut down issuances of new bonds and “zaito” debt to finance its fiscal investment and loan program for the year starting April, the figure has been relatively down 20.97 trillion yen from a year earlier on an initial budget basis.

On Friday, the country’s cabinet approved draft budget for fiscal 2022 worth 107.60 trillion yen ($940 billion). The amount is the largest ever that will be used to finance measures against the coronavirus pandemic, bumpy social security costs and record defense spending.

The budget for the new fiscal year starting in April in comparison to fiscal 2021’s initial 106.61 trillion yen will be a record high for the 10th year in a row.

The country’s heavy reliance on the debt, despite the planned shrinkage, to cover increasing social welfare and defense spending continues to remain unchanged.

Bond issuance for fiscal 2022 –

• The government is expecting a record 65.24 trillion yen in tax revenue, due to which the new bond issuance for fiscal 2022 will decrease to 36.93 trillion yen, down 6.67 trillion yen from fiscal 2021.
• The new bonds will cover the country’s new record-high state budget plan for fiscal 2022 of 107.60 trillion yen by 34.3 percent.
• The new debt will include 30.68 trillion yen of deficit-covering bonds and 6.25 trillion yen in construction bonds for public works projects.
• The government will issue refunding bonds to redeem shorter-term bonds with 152.94 trillion yen, up 5.75 trillion yen.
• Issuance of zaito debt, will be at 25.00 trillion yen, down 20.00 trillion yen.
• The government to cover expenses for rebuilding following the 2011 earthquake and tsunami that devastated northeastern Japan will also issue 171.6 billion yen worth of reconstruction bonds, down 46.7 billion yen.