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.