FACTBOX-Important figures for Japan’s 2011/12 budget

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TOKYO, Dec 20 (BestGrowthStock) – Japan’s government is set to
present on Dec. 24 a draft budget for next fiscal year, which
starts in April.

This will be the first budget that the Democratic Party-led
government compiles from scratch since ousting the Liberal
Democratic Party in August 2009 and a test of the government’s
ability to maintain fiscal discipline.

Japan’s public debt is about twice the size of its $5
trillion economy, the worst debt burden in the developed world.

The following are the important figures to look for in the
budget.

NEW BOND SALES

The government has repeatedly stated that it will retain this
year’s 44.3 trillion yen ($527.7 billion) ceiling on new bond
issues in the 2011/2012 budget.

The government is likely to meet this goal, according to a
Reuters poll of 12 debt strategists and analysts taken Dec. 9-14.
The limit is part of a framework the government adopted in June
aimed at reducing Japan’s debt burden.

GENERAL SPENDING, EXCLUDING DEBT SERVICING COSTS

The fiscal framework also says that general spending,
excluding debt servicing costs, will be capped at 71 trillion yen
for fiscal 2011/12, the same as the current fiscal year.

The government needs to cut 1.6 trillion yen from ministries’
initial budget requests to meet this goal.

GENERAL SPENDING, INCLUDING DEBT SERVICING COSTS

Initial budget requests for this category, which ministries
submitted in September, totalled a record 96.7 trillion yen for
fiscal 2011/12.

In comparison, general spending and debt servicing costs in
this year’s fiscal budget amount to 92.3 trillion yen.

TAX REVENUE

The finance ministry hasn’t made exact calculations for next
fiscal year’s tax revenue, but the government could bring in more
than 41 trillion yen, according to Deputy Finance Minister
Fumihiko Igarashi.

Analysts polled by Reuters also expect revenue to reach
about 41 trillion yen, compared with 39.6 trillion yen expected
for the current fiscal year.

Increased tax revenue could help the government to meet its
fiscal goals. Still, it is expected to come in below proceeds
from bond sales for a third consecutive year, highlighting the
weakness of Japan’s public finances.

NON-TAX REVENUE

Japanese governments regularly tap reserves stored in special
accounts, which they call non-tax revenue, to fund spending in
the general account. These reserves have been drying up and the
current government may not be able to rely on them much longer.

This fiscal year’s budget includes a record 10.6 trillion yen
in non-tax revenue.

PRIMARY BUDGET DEFICIT

The national government’s primary budget deficit, which
excludes debt servicing costs and income from bond sales, is 6.8
percent of gross domestic product for the current fiscal year.

The government has a goal of halving this ratio by fiscal
2015 and returning to a primary budget surplus by fiscal 2020.

DEBT SERVICING COSTS

Japanese yields are low compared with the United States and
Europe but they have been rising recently and this could affect
next fiscal year’s debt servicing costs, according to Finance
Minister Yoshihiko Noda.

Interest payments and retiring debt are expected to cost 20.6
trillion yen this fiscal year or 22.4 percent of the overall
budget.

WELFARE SPENDING

The government is preparing the public for an eventual
increase in the sales tax, now at 5 percent, to cover welfare
costs, which are rising steadily because of an ageing population.
In the current fiscal year, the government plans to spend 27.3
trillion yen on welfare — 29.5 percent of total spending. While
the government is unlikely to act quickly on the sales tax, a
further rise in welfare costs would put it under more pressure to
seek extra revenue.

PUBLIC WORKS

Spending on bridges, roads and infrastructure could be a
barometer of the government’s ability to shift fiscal policy away
from over-reliance on large-scale public works to spur growth.

This fiscal year’s budget sets aside 5.8 trillion yen for
public works, down 18 percent from the previous year. Last month,
the government passed an extra budget that allows regional
governments to frontload 239 billion yen in public works from the
2011/12 budget.
($1=83.94 Yen)
(Reporting by Stanley White; Editing by Tomasz Janowski and
Edmund Klamann)

FACTBOX-Important figures for Japan’s 2011/12 budget