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Speech on Fiscal Policy by Minister of Finance Aso at the 183th Session of the National Diet

Japanese

February 4,2013


We have prepared a draft supplementary budget for FY 2012 in response to the recently adopted “Emergency Economic Measures for the Revitalization of the Japanese Economy.” Before I request deliberation on it, I would like to provide an outline of the draft supplementary budget.

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

The Abe Administration attaches its highest priority to exiting from prolonged deflation accompanied by the yen’s appreciation, creating more jobs and increasing incomes, and revitalizing a strong Japanese economy.
Regarding the current economic circumstances, Japanese economy showed weakness in the latter half of last year due to deceleration of the world economy and there were fears of a still further decline in the economy.
However, stock prices have started to rise recently in expectation of future economic recovery. From now on as well, we will continue to closely monitor the developments in exchange markets, and, in parallel, we must surely lead these signs of improvement to the recovery of the economy and must wipe out the sense of stagnation spreading among the nation.
To achieve these goals, it is important to implement in a unified and consistent manner “three-pronged strategy” of aggressive monetary policy, flexible fiscal policy, and a growth strategy that promotes private investment.
On January 11th, Cabinet decided the “Emergency Economic Measures for the Revitalization of the Japanese Economy,” which is the first of a series of packages of the “three-pronged strategy.”
Placing emphasis on the three focus themes of “Measures for Post-quake Reconstruction and Disaster Prevention,” “Creation of Wealth through Growth,” and “Ensuring a Sense of Security in Daily Life and Revitalizing the Regions” and centering on promising sectors that will contribute to sustainable growth and that will support Japan into the future, we will prioritize measures that have immediate effects or that create demand. In addition to the supplementary budget, we will utilize all the available policy tools, such as tax measures and policy-based finance, and make regulatory reforms and for the stability of the currency market.
It is important to swiftly implement these measures to accelerate reconstruction from the Great East Japan Earthquake while considering the situation of the affected areas, to prevent the economy from bottoming out, to stimulate private investment, and to lead to sustainable growth.

Subsequent to these Emergency Economic Measures, the government and the Bank of Japan released a “joint statement” of their policy coordination on overcoming deflation and achieving sustainable economic growth.
In this “joint statement,” the Bank set the price stability target at 2 percent and aims to achieve this target at the earliest possible time.
Concurrently, in order to revitalize the Japanese economy, the government will flexibly manage macroeconomic policy and implement measures for strengthening competitiveness and growth potential of Japanese economy while ensuring the credibility of fiscal management.

The government will commit to prepare seamless policy responses for revitalization of the Japanese economy, including drawing up the FY 2013 Budget that will be unified with the FY 2012 Supplementary Budget with a concept of a “15-month budget,” as well as addressing for the FY 2013 Tax Reform.

(Summary of the FY 2012 Supplementary Budget)
Next, I will like to outline the FY 2012 Supplementary Budget submitted to the current session of Diet to implement “the Emergency Economic Measures for the Revitalization of the Japanese Economy.”
With respect to “the Emergency Economic Measures for the Revitalization of the Japanese Economy,” we are scheduled to implement a fiscal expenditure of 10,281.5 billion yen in total including the additional expenditures for the fiscal loan. We are allocating the expenditures of the general account in the amount of 2,200.5 billion yen for the expenditures related to “Advance disaster prevention/reduction, etc.” 2,692.4 billion yen for the expenditures related to “Creation of Wealth through Growth” and 3,101.7 billion yen for the expenditure related to “Security of life and regional activation” Besides these, we are allocating 239.7 billion yen as other expenditures, such as the international contributions.
To procure the funds for these expenditures, we are scheduled to decrease the amount of existing expenditures by 1,732.2 billion yen in the expenditures of the budget, forecast the increase in tax revenue by 261 billion yen and the increase of non-tax revenue by 149.5 billion yen, allocate the surplus of the previous fiscal year by 870.6 billion yen, and issue government bonds amounting to 5,221 billion yen in the revenues of the budget.
Furthermore, as for the reconstruction budget, following the Act for Securing the Fund for Reconstruction, we are allocating the provision to Special Account for Reconstruction from the Great East Japan Earthquake by 1,449.3 billion yen.
To procure the funds for this expenditure, we will decrease an amount equivalent to a salary cut for national government officials by 332.8 billion yen based on the Act Concerning the Revision of Salaries of National Government Officials and Temporary Exception, and in the revenues of the budget we are accounting for the surplus of the previous fiscal year by 1,116.5 billion yen.
In addition, as the expenditure accompanying the rise in the portion of the government contributions to basic pensions to one half, we will add 2,584.2 billion yen and, as the source of the expenditure, we will issue the same amount of the special government bonds for pension.
As a result, the FY 2012 general account of the budget as a whole will increase from the initial budget by 10,202.7 billion yen both for revenues and expenditures, amounting to 100,536.6 billion yen in total.
Furthermore, as for the special account budget, we will implement a required supplementation. Of the supplementation, for Special Account for Reconstruction from the Great East Japan Earthquake, we will make additions to the expenditures related to the reconstruction and to the redemption cost of the reconstruction bonds in the expenditures of the budget, and allocate the provision from the general account in the revenues of the budget, and decrease the issuance of the Reconstruction Bonds, whereby the increase in this special account amounts to 1,195.3 billion yen both for revenues and expenditures.
With respect to the fiscal investment and loan program, we are adding 405.9 billion yen to industrial investment and 402.8 billion yen to the fiscal loan.

(Concluding remarks)
This concludes the outline the draft supplementary budget for FY 2012.
The earliest possible passage of the supplementary budget is necessary in order to exit from prolonged deflation accompanied by the yen’s appreciation and to revitalize the economy.
I hereby request that the Diet deliberate on this supplementary budget and promptly give its approval.

 

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