Government Budget for FY2002

The Japanese government has made it its general policy to limit government bond issues to under 30 trillion yen as part of its strategy to undertake full-scale structural reforms which it hopes will lead to a balanced budget. However, it has also announced that it will allocate approximately one trillion yen in spending to the following seven sectors: (1) the environment; (2) the declining birthrate and aging population; (3) regional revitalization; (4) urban renewal; (5) science and technology; (6) education and training; and (7) information technology.

The deadline for receiving budgetary proposals is the end of August, but for these seven sectors, the deadline has been moved back one month. The government has already announced plans for cutting public works projects, ODA, and defense spending by 10% and minimizing increases in social security funding. The increased spending in these seven strategic sectors suggests that the government is seeking a more effective budget allocation curve to cushion the effects that a reduction in government spending will have on the economy.
On the other hand, the government has yet to announce a specific plan for developing safety nets for coping with the risk of increased unemployment, a side effect of its structural reform plans, or to clarify where the budget for employment stimulus packages will come from; nor has it successfully dealt with questions concerning ways to write off bad debts, streamline public corporations, and other steps for reducing spending. It will be extremely interesting to see how the government addresses these and other issues between now and the end of the year, when the new budget package is announced.

The composition of the Japanese government budget for FY2001 is outlined at;
https://www.mof.go.jp/english/policy/budget/budget/fy2001/brief/index.htm

Prime Minister Koizumi's cabinet also believes that structural reforms must be accompanied by a reexamination of the relationship between the central government and the prefectures, and has announced that it will review the system for central funding of local governments, which forms one of the prime sources of the latter's income. Again, it will be interesting to see whether Koizumi's government is able to introduce measures such as transferring some of the central government's tax collection rights to local governments so that they can reduce their massive debts and how they will react to the increased autonomy that is bound to result by cutting some of the "assistance" that the central government now provides.