Japan plans to introduce a record budget of $734 billion, as the debt crisis and central bank policy shift intertwine to become a global focus!

According to reports, the draft of Japan's government financial plan reveals the dual pressure faced by the Japanese government in dealing with the skyrocketing social security expenditures and rising debt repayment costs. Starting in April, an unprecedented scale of annual budget preparation work will be launched, with a total amount of up to $734 billion (equivalent to approximately 115.5 trillion yen). This number will undoubtedly increase Japan's debt burden and become a focus of domestic and international attention. Against this backdrop, the policy shift of the Bank of Japan is particularly noteworthy. After a decade of economic stimulus measures, the Bank of Japan is gradually exiting this historic policy framework, meaning that the government will no longer be able to easily finance the ever-increasing debt with ultra-low borrowing costs and strong support from the central bank. This change undoubtedly presents unprecedented challenges to Japan's fiscal management. However, facing these difficulties, the Japanese government has shown a proactive stance. According to the draft content, the government plans to utilize the growth in tax revenue to significantly reduce the issuance of new bonds for the next fiscal year, sharply reducing it from the originally planned 35.4 trillion yen to 28.6 trillion yen. This move marks the first time since 17 years ago that the new bond issuance size has fallen below the significant threshold of 30 trillion yen, demonstrating the government's firm determination to improve the public financial situation. The strong performance of tax revenue is also worth noting. Benefiting from a significant recovery in corporate profits, the government expects tax revenue to reach an unprecedented level of 78.4 trillion yen, providing valuable funds to alleviate fiscal pressures. However, with the expected increase in interest rates - from 1.9% in April of this year to 2% - the government's debt repayment costs will also rise, increasing from 27 trillion yen in this fiscal year to 28.2 trillion yen, adding new uncertainty to the already tense fiscal situation. Overall, the Japanese government is facing a complex and urgent fiscal challenge: on one hand, it needs to prepare a record-breaking budget to address the growing public expenditure needs; on the other hand, it needs to seek a delicate balance between reducing new bond issuance, increasing tax efficiency, and managing the increased debt repayment costs due to rising interest rates, in order to steadily promote the improvement and sustainable development of public finances while reducing the debt burden. This series of measures not only tests the government's wisdom and determination but will also have profound implications for the future direction of the Japanese and global economy.