Japan Govt Urged to Overhaul Budget Drafting Process

Tokyo, April 13 (Jiji Press)–Private-sector members of a key Japanese government panel Monday underlined the need for the government to drastically review its budget compilation process to realize “responsible yet aggressive” fiscal policy advocated by Prime Minister Sanae Takaichi. The private-sector members also called for setting a new investment quota separate from ordinary expenditures for investments regarding crisis management and growth, which are central to the administration’s growth strategy. The proposal was made at a meeting of the Council on Economic and Fiscal Policy, chaired by Takaichi, to begin full-fledged discussions on compiling the administration’s first basic policy on economic and fiscal management and reform this summer. “We will ensure steps to achieve both a strong economy and fiscal sustainability alongside a focus on growth and investment,” Takaichi said at the meeting. She expressed determination to accelerate efforts to overhaul budget formulation, with the private sector members’ proposal in mind. The proposal to establish a new investment quota is aimed at stepping up efforts to promote domestic investment through public-private cooperation. It seeks to set an adequate implementation period based on a roadmap for public and private investments, while managing investments in areas particularly important for the country’s economic security separately after securing financial resources over multiple fiscal years. On fiscal management, the proposal urged the government to set the goal of stably lowering the ratio of its debt to the country’s gross domestic product as a core target. It called for a shift in the approach to the primary budget balance at the central and local governments, which has been used as an indicator for fiscal soundness, toward management over multiple years, with temporary deficits allowed if fiscal sustainability is ensured. The proposal recommended that the financial resources for the new investment quota be flexibly managed in terms of fiscal scale while being consistent with the proposed core target. The private-sector members also called on the government to review its fiscal 2027 budget drafting process in line with economic expansion, including inflation and wage growth. They highlighted the need for the basic guidelines to be concise, comprehensible and message-oriented, by limiting their content to the broad direction of policies and important policy changes. In response, Takaichi indicated that permanent policies would be included in the initial budget in principle. END [Copyright The Jiji Press, Ltd.]