The economic crisis caused by the spread of the novel coronavirus has threatened fiscal sustainability. Breaking down bureaucratic sectionalism among government ministries and agencies, which is advocated by Prime Minister Yoshihide Suga, must be reflected in compiling budgets, and efficient budget compilation and prioritizing necessary projects must be expedited.
The deadline for budgetary requests from each ministry and agency for fiscal 2021 has passed. The total amount is expected to exceed the record high of about 105 trillion yen for the previous fiscal year.
This time, the Finance Ministry did not set a ceiling on how much could be requested for extremely urgent expenses, such as measures against the coronavirus. When ministries and agencies plan for such expenses, they are not required to specify concrete numerical amounts, but only to write down separate expense items, so there is a possibility that the ultimate scale of the budget could greatly increase.
Japan's fiscal situation is already so critical that unlimited spending increases cannot be allowed.
For fiscal 2020, expenditures increased from about 103 trillion yen in the initial budget to 160 trillion yen through two supplementary budgets. Of this amount, 90 trillion yen is covered by the issuance of government bonds.
The outstanding amount of Japanese government bonds is about 1 quadrillion yen, double the nation's gross domestic product. It is the worst level among developed countries. The government and ruling parties should be acutely aware of fiscal discipline.
Needless to say, the government must not hesitate to allocate funds to the necessary fields.
First of all, all possible measures should be taken to deal with the coronavirus, such as improving medical and testing systems. In addition to investments that will lead to growth, such as digitization of society and administrative tasks, measures to deal with ever-greater flood damage should not be neglected.
That does not automatically mean that the following cases are allowed: Old projects with little relevance being slipped into policies under the name of such priority policies; or projects overlapping due to a lack of coordination among ministries and agencies.
Among the requests from each ministry and agency that do not specify concrete numerical amounts, the urgency of some of the projects has been questioned, as they are requests for old continued projects. They include the elimination of utility poles by laying electric cables underground. In addition, ministries and agencies are separately requesting budgets for digitization and disaster response.
It is essential for the Finance Ministry to not only make drastic cuts to budgets for nonurgent, nonessential projects, but also to check similar projects and make comprehensive adjustments to eliminate bureaucratic sectionalism.
Reducing social security costs, including those for medical services and pensions, will continue to be a major challenge. The Health, Labor and Welfare Ministry requested about 33 trillion yen, almost the same amount as its initial budget for the previous fiscal year. However, the figure does not include the amount of a natural increase in social security costs due to the aging of the population.
The scale of medical expenses cannot be estimated, as patients are refraining from visiting medical institutions during the coronavirus crisis. For that reason, the ministry plans to closely examine an increase in medical costs. Efforts should be made to contain the costs as much as possible.
The government has presented a policy to raise the portion of medical fees that people aged 75 and older have to cover themselves from the current 10% in principle to 20% for those with a certain income level. Through the compilation of the budget, it is important to deepen discussions on what kind of benefits should be provided and what kind of burdens should be shouldered.
-- The original Japanese article appeared in The Yomiuri Shimbun on Oct. 1, 2020.
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