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Speech on Fiscal Policy by Minister of Finance Noda at the 176th Session of the National Diet

Speech on Fiscal Policy by Minister of Finance Noda at the 176th Session of the National Diet

November 2, 2010

We have prepared a draft supplementary budget for FY 2010 in response to the recently adopted “Comprehensive Emergency Economic Measures in Response to the Yen's Appreciation and Deflation.” Before I request deliberation on it, I would like to provide an outline of the draft supplementary budget.

(Recent economic situation and the Comprehensive Emergency Economic Measures)

First, I would like to describe the recent economic situation and the Comprehensive Emergency Economic Measures.

Although the Japanese economy has recently been picking up due to external demand, mainly from Asia, the recovery is now pausing. In addition, it also is in a difficult situation such as a high unemployment rate, particularly among younger people.

As for short-term prospects, while the economy is expected to be picking up, reflecting improvement in overseas economies and the effects of various policy measures, on the other hand, the risks that the economy is depressed by a possible slowdown in overseas economies and fluctuations in exchange rates are increasing.

In consideration of these economic conditions, on September 10, the government adopted the “Three-Step Economic Measures for the Realization of the New Growth Strategy,” which set forth how policy measures should be implemented in the period through FY 2011, and on October 8, it adopted the “Comprehensive Emergency Economic Measures in Response to the Yen's Appreciation and Deflation” as “Step 2” of the Three-Step Economic Measures.

The Comprehensive Emergency Economic Measures feature as their five pillars: employment and human resources development; promotion and acceleration of the New Growth Strategy; child-rearing, healthcare, nursing care, and social services; regional revitalization, improvement of the social infrastructure, and measures to support small and medium-sized enterprises; and regulatory and institutional reforms; and the government will implement measures that truly help to revitalize the economy and make the people's lives secure and safe.

In employment and human resources development, the government will implement the Assistance Program for the Employment of New Graduates, expand job creation programs in strategic fields, and extend the emergency program for human resources development, among other measures.

In promotion and acceleration of the New Growth Strategy, the government will take measures to promote green innovation, including securing natural resources, and implement a strategy to turn Japan into a nation built on science, technology, and telecommunications, including promotion of research and development on advanced technologies.

In child-rearing, healthcare, nursing care, and social services, the government will improve the foundations of childcare services, strive to prevent child abuse, revive community healthcare, reinforce the functions of medical institutions, advance disease control, and enhance nursing-care services.

In regional revitalization, improvement of the social infrastructure, and measures to support small and medium-sized enterprises, the government will advance earthquake resistance to make the residential and living environments safer, expand support provided from the perspective of the regions, and make infrastructural improvements that contribute to revitalization of local economies.

In regulatory and institutional reforms, the government will steadily implement existing reform measures and work on new ones, mainly in the strategic areas mentioned in the New Growth Strategy.

The government will ensure the Japanese economy's exit from deflation and the creation of a virtuous economic cycle by implementing these policy measures quickly and seamlessly.

(Outline of the draft supplementary budget for FY 2010 [Article 1 of the General Account, Article 1 of the Special Account, and Article 1 of the Budgets of Government Agencies])

Next, I will outline the draft supplementary budget for FY 2010 which we have submitted.

First, with regard to expenditures related to the Comprehensive Emergency Economic Measures, we have allocated 319.9 billion yen for employment and human resource development; 336.9 billion yen for promotion and acceleration of the New Growth Strategy; 1.1239 trillion yen for child-rearing, healthcare, nursing care, and social services; and 3.0706 trillion yen for regional revitalization, improvement of the social infrastructure, and measures to support small and medium-sized enterprises; for a total of 4.8513 trillion yen. In addition, we have reduced existing expenditures by 1.4313 trillion yen.

As for revenues, we project a tax revenue increase of 2.247 trillion yen as the effect of the increase in the tax revenue base (settlement for FY 2009 exceeded the FY 2009 supplementary budget, which we used as a base for budget FY 2010), and due to the recent taxation results. In addition, while we will register a budget surplus of 2.2005 trillion yen carried over from the previous fiscal year, non-tax revenues are expected to decline.

As a result, the total amount of the general account budget for FY 2010, including the supplementary budget, will be 96.7284 trillion yen: an increase of 4.4292 trillion yen from the initial budget in both revenues and expenditures.

In relation to these supplementary steps for the general account, we will also take necessary supplementary steps for the special account budgets.

Regarding the Fiscal Investment and Loan Program, in order to implement these measures, we will make additional industrial investments totaling 24.0 billion yen under this supplementary budget.

This concludes the outline of the draft supplementary budget for FY 2010.

The earliest possible passage of the supplementary budget is necessary in order to deal effectively with the current severe economic situation and to ensure economic recovery.

I hereby request that the Diet deliberate on this supplementary budget and promptly give its approval.

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