Japan’s parliament passed Thursday a record $801 billion budget for the fiscal year which started on April 1 that reduces new borrowing for a third year in a bid to balance the need for economic growth with fiscal discipline.
The vote on the 96.34 trillion yen ($800.96 billion) general-account budget, the third since Prime Minister Shinzo Abe took power in late 2012, was delayed until after the start of the fiscal year due to a general election held late last year.
Japan’s parliament had previously approved a short-term budget to make sure there were no disruptions to government spending before the full budget passed.
The budget spiraled to the biggest to date as welfare spending jumped to a record 31.53 trillion yen, due to the cost of caring for Japan’s rapidly aging population.
Defense spending also hit a record, of 4.98 trillion yen, reflecting Abe’s ambition to counter China’s rising military might.
Abe’s government could face pressure to cut spending in the future because the public debt burden is more than twice the size of its $5 trillion economy, the industrial world’s heaviest burden.