Prime Minister Shinzo Abe might like to portray the government's general account budget for fiscal 2016, approved by his Cabinet this week, as proof that his policies are working both to achieve economic growth and restore the nation's fiscal health. The ¥96.72 trillion annual budget — the biggest ever — assumes an increase in tax revenue to the highest level in 25 years, thanks to improved corporate earnings, and issuance of new government bonds will be kept to the lowest in eight years.

However, the restraint on increases in social security expenses and public works spending in fiscal 2016 comes on the heels of lavish spending to be paid for in the supplementary budget for fiscal 2015, including those that appear aimed at securing voter support for the ruling coalition in the upcoming Upper House election. The two budget packages together appear to represent insufficient efforts by the Abe administration to streamline government spending in the face of mounting public debt. Defense spending meanwhile will be increased for the fourth year in a row and will exceed ¥5 trillion for the first time in fiscal 2016.

Policy-related expenditures, not including debt-servicing costs, will hit a record ¥73.11 trillion in fiscal 2016, with social security expenses such as medical and nursing care costs — growing rapidly amid the rapid aging of Japan's population — reaching ¥31.97 trillion, or more than 40 percent of such spending.