Japan’s government will set aside $26 billion for new child care measures, slightly more than previously estimated, in a move likely to add more debt to the industrialized world’s heaviest public debt burden.
Prime Minister Fumio Kishida has vowed to double such spending over the next three years to stem the country’s declining birth rate, even if it means further stretching the government’s fiscal position.
Mr. Kishida told ministers on Wednesday that he wants to increase planned child care spending, which tops the agenda of his administration’s mid-year economic policy guidelines to be adopted in mid-June.
The measures are aimed at supporting higher education, preventing child abuse in poverty and ensuring medical care for children with disabilities, Economy Minister Shigeyuki Goto told Fumio Kishida at the ministers’ meeting.
There was no discussion on sources of funding, he said.
Japan is already the most indebted government in the industrialized world, with a public debt more than twice the size of its economy.
Kyodo news agency reported that the government is leaning toward introducing a new type of bond to raise money for education fees.
“Talk of this budget comes at a delicate time as the government tries to bring down a primary budget surplus while government debt balloons,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
“This could complicate matters when it comes to changing monetary easing for the Bank of Japan at the risk of raising borrowing costs.”
Doubling child care as well as military spending aimed at combating threats from China and North Korea run counter to any move toward fiscal reform.
Mr Kishida has ruled out a sales tax hike as an option, while his government is considering tapping increased premiums for public Medicare and reducing other social welfare outlays to fund more childcare spending Is.
Births in Japan are set to fall to a record low in 2022, official projections show, falling below 800,000 for the first time – a historic moment that came eight years earlier than the government expected. ($1 = 135.0500 yen)
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