Japan budget requests hit record of $996.85b  for next fiscal year

Japan’s ministries have asked for a record $997 billion in initial budget for the next fiscal year, the finance ministry said, as Prime Minister Yoshihide Suga’s new government juggles the need to rein in the pandemic and revive the economy.

The general account spending requests for the fiscal year that begins next April totalled 105.4071 trillion yen ($996.85 billion), exceeding the previous high of 105 trillion sought for the current year.

The amount got a boost from demand related to urgent steps to contain the virus spread and ease the pain from the economic fallout, which triggered the deepest recession on record.

“We remain committed to achieving both economic revival and fiscal reform, and we’ll overcome the coronavirus crisis to pass the future on to the next generation,” Wataru Ito, state minister of finance, told reporters on Wednesday.

The first budget under Suga underscored a struggle for the heavily indebted government to curb snowballing debt that tops twice the size of Japan’s $5 trillion economy.

Many submitted requests did not specify the amount of spending, leaving room to swell the overall figure as the finance ministry reviews the requests and finalises the amount of spending in late December.

Highlighting the bulging costs of supporting an ageing population and financing debt, budget requests for social security and debt servicing came to 32.9 trillion yen and 25.5 trillion yen respectively, or more than half the overall budget.

Virus uncertainty kept the finance ministry from setting a ceiling on overall budget requests, making it tough to curb spending.

Two extra stimulus budgets compiled for this fiscal year to tackle the virus will boost overall government spending to about 160 trillion yen, or 1.6 times the initial budget.

Meanwhile, Japanese shares ended little changed on Wednesday, as fears of a slower economic recovery from the coronavirus crisis resurfaced after US President Donald Trump halted talks for an additional stimulus package until after the election.

The benchmark Nikkei share average was little changed at 23,422.82 at the close, while the broader Topix was almost flat at 1,646.47.

Nearly a third of 33 sector sub-indexes on the Tokyo exchange traded lower, with pharmaceuticals, fisheries and forestry and foods leading the decliners on the main bourse.

Prospects for additional US coronavirus bill crumbled after Trump announced on Twitter that he was calling off negotiations with Democratic lawmakers on coronavirus relief legislation until after the election.

Also weighing on the market was the uncertainty of Trump’s health, with the U.S. presidential election just less than a month away.

“In some part, I think President Trump is forcing himself too hard since he has left the hospital in a short period of time,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“It would be crucial to be cautious of how his health progresses from now on.”

Boeing-related shares Mitsubishi Heavy Industries fell 0.74%, while Kawasaki Heavy Industries was down 0.14%, in line with their US peers as Boeing Co cut its rolling 20-year forecast for airplane demand on the coronavirus crisis.

Yakult Honsha Co slipped 7.12% after French food group Danone said it would sell its remaining 500 million euro ($586.60 million) stake in the Japanese probiotic yogurt maker.

Elsewhere, Nippon Telegraph and Telephone Corporation jumped 3.31% and Fanuc inched up 0.1%, while Fujitsu lost 0.53% after the three firms said they would set up cloud service joint venture for manufacturing companies.

The Mothers Index of start-up firms climbed more than 2%.

Separately, the chief executive of Japan’s Mizuho Financial Group aims to give employees the option of a shorter working week as it seeks to boost flexibility during the coronavirus pandemic, a company spokeswoman said on Wednesday.

Chief Executive Officer Tatsufumi Sakai made the comments on Tuesday at a symposium organized by the Nikkei, she said.

Mizuho, Japan’s third-largest lender by assets, will give about 45,000 employees the option to work three or four days a week, the spokeswoman said. It aims to make the option available from December after holding talks with its labour union.

It comes as firms in Japan, known for a strong work ethic and long working hours, have sought to give employees more flexibility during the pandemic, according to a Reuters poll in August.

Reuters