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Japan approves record budget draft

By Yoko Wakatsuki, CNN
Japanese Prime Minister Naoto Kan has cut new bond issuance but has allowed tax revenue to exceed it again.
Japanese Prime Minister Naoto Kan has cut new bond issuance but has allowed tax revenue to exceed it again.
STORY HIGHLIGHTS
  • The 92.4 trillion yen ($1.11 trillion) budget draft is the nation's largest ever
  • It aims to boost economic growth and increase of jobs
  • The prime minister faces an uphill battle to get it approved
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Tokyo (CNN) -- The Japanese government on Friday approved a record budget draft for the next fiscal year aimed at boosting economic growth and increasing jobs.

The 92.4 trillion yen ($1.11 trillion) budget draft is the nation's largest ever.

"We managed to provide the budget for necessary projects while walking on the tightrope of balance between economic growth and fiscal discipline," Finance Minister Yoshihiko Noda said at a news conference.

The government plans to spend 70.8 trillion yen ($853 billion) for general policy delivery. About 21.5 trillion yen ($259 billion), nearly a quarter of the budget, is to be spent on repaying the national debt.

Other major spending includes child allowance and farming incentives.

The welfare cost for the world's fastest-graying country and the effect of the national debt payment are the biggest headaches for Japan's financial health, which is the worst among major developed nations.

Prime Minister Naoto Kan managed to bring down the new bond issuance slightly to 44.2 trillion yen ($530 billion), but allowed tax revenue to exceed it for the second consecutive year.

The defense budget edged down by 0.3% from the previous year to 4.77 trillion yen ($57 billion). The decline was relatively small compared with other areas. Japan says it's strengthening its defense focus on the southern part of the country, where it faces intensifying security challenges from its Asian neighbors, including North Korea.

The government plans to spend 186 billion yen ($2.2 billion) to host U.S. forces in Japan.

Cabinet officials will submit the budget draft to the Diet, or Japanese Parliament, in January.

The prime minister faces an uphill battle to get it approved as opposition parties hold the majority in the upper house of the parliament.