TOKYO (Reuters) – Japan on Wednesday released an annual budget framework for the upcoming fiscal year aimed at boosting growth in prime minister Yoshihide Suga’s target areas, with his eyes set on a post-pandemic era, finance ministry officials said.
The budget framework, approved by Suga’s cabinet, underscores the prime minister’s goal of promoting investment in four areas – digital, green, regional economies and childcare – to underpin Japan’s long-term growth potential.
In a sign that the immediate focus remains on fighting the COVID-19 pandemic and prioritizing economic recovery over fiscal reform, the framework fell short of setting a cap on when each ministry submits its budget request next month.
Given a “natural increase” in social spending in a rapidly aging population, the government will allow the request for the social security budget to increase by as much as 660 billion yen ($ 5.96 billion), they said.
While urging investment in growth areas, the government encouraged ministries to curb discretionary spending in areas such as education and public works.
For example, if each ministry reviews discretionary spending and cuts those spending requests by 10%, they would be allowed to request three times that amount for growth-related disbursements.
If all ministries cut discretionary spending by 10%, that would help create a 4.4 trillion yen worth of money to be spent promoting higher growth areas.
Based on the budget framework, the ministries will submit the budget requests in late August and then negotiate with the Ministry of Finance for the compilation of the annual budget in late December.
Japan’s annual budget has topped 106 trillion yen this fiscal year, rolling over a record amount initially for nine years in a row. The government remains under pressure for higher spending due to the pain of COVID-19 and rising social spending.
Any boost to spending would further strain Japan’s public finances. It already has the heaviest debt in the industrialized world, more than twice the size of its $ 5 trillion economy, making its primary budget surplus target for fiscal year 2025 even more elusive.
($ 1 = 110.6800 yen)
Fusion Media or anyone involved with Fusion Media will not accept any responsibility for loss or damage as a result of reliance on information, including data, quotes, charts, and buy / sell signals contained on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.