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Speech on Fiscal Policy by Minister of Finance Aso at the 192th Session of the National Diet

Japanese

September 26, 2016


We have prepared a second draft supplementary budget for FY2016 in response to “Economic Measures for Realizing Investment for the Future,” which was recently approved by the Cabinet. Before requesting deliberation on it, I would like to provide an outline of the draft supplementary budget.

(Opening remarks)

With respect to the current state of the Japanese economy, efforts by the Abe Cabinet have improved economic conditions, including the significant improvement of the employment and income situation. However, as structural factors such as the declining birthrate and aging population as well as the slump in potential growth, there is a lack of strength in private consumption and business investments. Also, risks of declining demand in the global economy and slowdown of global economic growth are concerns due to the sluggish emerging market economies and the outcome of the referendum on the UK’s membership in the EU.
Considering such current status of the economy, “Economic Measures for Realizing Investment for the Future” was approved by the Cabinet on August 2. These economic measures mainly focus on efforts that will lead to sustained economic growth led by private-sector demand and a society in which all citizens are dynamically engaged, and aim to accelerate structural reform and investment for the future.

(Summary of the FY2016 second supplementary budget)

As for the second supplementary budget for FY2016, additional expenditure of around 4.1 trillion yen in total is assumed under the supplementary general account budget. This includes around 710 billion yen for expenses related to the “Accelerating efforts to build a society in which all citizens are dynamically engaged,” around 1.41 trillion yen for expenses related to the “21st-century-type infrastructure developments,” around 430 billion yen for expenses related to “Response to risk such as uncertainty due to the UK’s exit from the EU and support for SMEs and microenterprises as well as local communities,” and around 1.44 trillion yen for expenses related to “Reconstruction from the 2016 Kumamoto Earthquake and the Great East Japan Earthquake, safety and security, and disaster prevention.” In addition, around 130 billion yen is transferred to the Special Account for Reconstruction from the Great East Japan Earthquake.
With regard to the financial resources, existing expenditure is reduced by around 830 billion yen in terms of expenditure. In terms of revenue, we expect to increase revenue by around 280 billion yen with non-tax revenue, and there is also the surplus from the previous fiscal year of around 250 billion yen. In addition, government construction bonds with a total value of 2.75 trillion yen are scheduled to be issued.
As a result, the total general account budget for FY2016 after the second supplement will be about 100.1 trillion yen, which is an increase by around 3.29 trillion yen from the general account budget after the first supplement.
Necessary supplementary measures are also planned for the special account budget. Among them, as for the Special Account on Reconstruction from the Great East Japan Earthquake, expenditure related to the costs of reconstruction and reconstruction bond redemption is added in terms of expenditure. In terms of revenue, there is a transfer from the general account, and both the revenue and expenditure are increased by around 320 billion yen. 
As for the fiscal investment and loan program, based on these economic measures, about 3.6 trillion yen is added in order to take advantage of the current low yield situation and provide super long-term financing for infrastructure construction. 

(Concluding remarks)

This concludes my explanation of the outline of the second supplementary budget for FY2016.
I hereby request that the Diet deliberate on this supplementary budget and promptly give its approval.
 
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