Japan's finance ministry yesterday submitted the country's largest budget, worth 84,990 billion yen ($825 billion) for the next fiscal year.
The budget, up 3.8 per cent on this year's, is intended to bolster Japan's stuttering economy, the world's second biggest, which is in danger of slipping back into a technical recession.
Government spending next year will require record issuance of Japanese government debt, and confirm the country as having the worst gross debt as a proportion of gross domestic product among members of the Organisation for Economic Co-operation and Development.
"We are crafting a budget to jump-start a full economic recovery," said Mr Kiichi Miyazawa, the Finance Minister. "The economic upturn is not yet self-sustaining."
Mr Miyazawa warned that this would be the last expansionary budget, as Japan could not continue to spend. "We will never compile this type of budget again, so I wanted to include all that is needed."
In order to pay for the budget, which covers the year from April 2000, the Ministry of Finance said it would issue at least Y85,870 billion of government bonds next year. The OECD warned this month that Japan's gross debt would reach 115 per cent of GDP by the end of next fiscal year.
The volume of next year's issuance was in line with market expectations. The yield on the benchmark 218th 10-year Japanese bond fell 0.035 percentage points to 1.72 per cent.
Economists warned that the budget would not prevent the economy contracting next year and that supplementary stimulus would be required. The budget expects tax revenue to expand 3.3 per cent next year.
