Sheikh Mohamed extended his sympathies during a visit to the mourning majlis in Al Ain
uae10 hours ago
Japanese Prime Minister Shinzo Abe's cabinet approved on Friday a record $900 billion draft budget for the next fiscal year, boosted by spending to offset the impact of a planned sales tax hike, in a sign that fiscal reform is taking a backseat.
The general-account budget for the year starting April 1 is ¥101.5 trillion ($902.3 billion), and features increased spending on welfare, public works and defence on top of the offsetting steps, the Ministry of Finance said on Friday.
The proposed spending level compares with this year's initial ¥97.7 trillion and sets a record for a seventh straight year, as Japan struggles to curb bulging welfare costs to support its fast-ageing population.
The budget, which needs to pass parliament by April, illustrates Abe's willingness to spend big to avoid a repeat of the economic downturn caused by the April 2014 sales tax hike to 8 per cent from 5 per cent.
Abe has twice postponed the planned increase to 10 per cent. But he has vowed to go ahead in October 2019 by taking "more than enough steps" to cushion the impact and to avoid a surge in demand before the hike and a sharp pullback afterward.
"Abe's government has gone too far in budget spending on sales tax painkiller," said Koya Miyamae, senior economist at SMBC Nikko Securities. "It could set a precedence that bigger fiscal spending will be called for whenever the sales tax goes up. That would delay fiscal reform even if the tax rises further," he said.
Of the ¥101.5 trillion in budget outlays, about ¥2 trillion will be specifically for steps to ease the impact from the higher sales tax, ranging from infrastructure spending to shopping vouchers to help low-income households.
Taking into account extra budgets for the current fiscal year, however, stimulus spending is estimated to hit ¥6.5 trillion - far exceeding about ¥5.6 trillion of extra annual revenue from the sales tax hike, Miyamae added.
The budget draft followed last week's decision by Abe's ruling bloc on tax-code revision, which featured ¥167 billion in tax breaks on purchases of cars and homes to offset the hit from the sales tax hike. "We were able to manage both needs of economic revival and fiscal consolidation with this budget," Finance Minister Taro Aso told reporters.
Extra budget
Abe has vowed to keep the fiscal spigot open over the next two years to ease the tax hike pain. This will further strain Japan's debt burden, which is the industrial world's heaviest at more than twice the size of its $5 trillion economy.
This means the government could struggle to achieve its target of a primary budget surplus, excluding new bond sales and debt servicing, by the fiscal year that ends in March 2026. On Friday, Abe's cabinet also approved an extra budget for the current fiscal year, with additional spending of about ¥3 trillion to boost infrastructure and extra construction bond issuance of ¥1.3 trillion to help fund the spending.
The premier is counting on growth to boost tax revenue to reduce new borrowing and on the Bank of Japan's low-rate policy to curb the high cost of servicing mammoth public debt.
The government expects around a record 62.5 trillion yen in tax revenue for the next fiscal year, aided by economic growth and the scheduled sales tax hike.
Thanks to hefty tax revenue estimates, the government will lower issuance of new bonds to around ¥32.7 trillion in fiscal 2019, a decrease for the ninth straight year that would lower the debt dependency ratio to 32.2 per cent - still higher than other advanced peers.
Sheikh Mohamed extended his sympathies during a visit to the mourning majlis in Al Ain
uae10 hours ago
According to an official, several people are still feared trapped in the debris
asia11 hours ago
Amateurs Afzaal Ahmad, Parvez Ahmed, and Arbaaz Ahmad shine with an Impressive 89-point performance at the Emirates Golf Club
sports11 hours ago
The Meteorological Organisation that it is closely monitoring what is being circulated on social media
mena12 hours ago
There have been a series of school fires in the country in recent years, many of them which have turned out to be arson
africa12 hours ago
Salama Alfalacy is into realistic art featuring landscapes and wildlife, while Meera Jamal Al Midfa is setting new grounds in performance art and filmmaking
arts13 hours ago
Dubai Police have asked drivers to be extra cautious
transport13 hours ago
The storm had already claimed the lives of at least two people in China's Hainan and 16 people in the Philippines
asia14 hours ago