Speech on Fiscal Policy by Minister of Finance Shiokawa
at the 154th Session of the National Diet
January 21, 2002
In line with the previously approved Immediate Action Program for Structural Reform, the Government has prepared the FY2001 Supplementary Budget (Article Two of the General Account and Article Two of the Special Account). Before requesting Diet deliberations, I would like to briefly outline the Supplementary Budget .
( The Recent Economic Situation and the Immediate Action Program for Structural Reform )
First, I would like to focus on the recent economic situation and the previously approved Immediate Action Program for Structural Reform.
Under the basic policy of “no growth without reform,” the Government has energetically advancedvarious structural reforms in the areas of economic and fiscal management, while carefully considering the changes in economic circumstances. In October 2001, the Government approved the Advanced Reform Program, a series of initiatives to be formulated and implemented in advance of the general body of reforms. The First Supplementary Budget was formulated at that time, placing special importance on unemployment countermeasures.
The terrorist attacks on the United States have heightened the risk of global recession. The economic conditions in Japan have further deteriorated with the decline in output, business investment, and the weakened personal consumption.
In response to these sudden changes in the economic circumstances, the Government compiled the Immediate Action Program for Structural Reform last December to prevent economic deceleration coupled with deflation, to promote further structural reforms, and to respond to local government requests for infrastructure enhancement.
The Program focuses on the development of social infrastructure targeting priority areas in structural reform. Based on a four-part policy framework, consisting of (1) further upgrading and internationalization of urban functions, (2) creation of environment-friendly and vigorous local communities, (3) expansion of growth frontiers by promoting science and technology, education, and IT, and (4) responses to the declining birthrate and the aging society, the Program anticipates initiatives conducive to stimulating private investment and creating employment opportunities, and selects projects whose prompt implementation is possible and needed and which are expected to have an immediate impact on the economy.
( Outline of the FY2001 Supplementary Budget [ Article Two of the General Account and Article Two of the Special Account ] )
Next, I will outline the FY2001 Supplementary Budget ( Article Two of the General Account and Article Two of the Special Account ) that we have submitted to the Diet.
To implement the aforementioned Immediate Action Program for Structural Reform, the Government shall allocate a sum of 2.5 trillion yen for the Supplementary Budget of the General Account which includes expenditures for the Special Account for Industrial Investment and a sum of 139.2 billion yen for the General Account itself.
In terms of revenues, the Government shall refrain from easy issue of government bonds, take 2.5 trillion yen from the Special Account for the Government Bonds Consolidation Funds and initiate adjustment of the Government Bonds Consolidation Funds by selling in Nippon Telegraph and Telephone Corporation shares. Furthermore, the Government will appropriate another 132.6 billion yen from the Special Account for Industrial Investment, which is the fund from operation of the General Account. Revenue will total the appropriation of 2,639.2 billion yen.
As a result, the total sum of the FY2001 after the Second Supplementary Budget of the General Account will be 86,352.6 billion yen.
The Supplementary Budget for the Special Account for Industrial Investment shall receive 2.5 trillion yen in its Social Capital Adjustment Account from the General Account as revenues, and expenditure of 2.5 trillion yen will be appropriated under Special Measures for Public Investments for Promoting Reform as follows: (1) 627.8 billion yen for the further upgrading and internationalization of urban functions, (2) 655.8 billion yen for the creation of environment-friendly and vigorous local communities, (3) 872.0 billion yen for the expansion of growth frontiers by promoting science and technology, education, and IT, and (4) 344.4 billion yen for responses to the declining birthrate and the aging society.
In addition to these budgetary supplements to the General Account and the Special Account for Industrial Investment, supplements to other Special Accounts will also be necessary.
As for the Fiscal Investment and Loans Program, a sum of 11.3 billion yen will be added to the Special Account for Government-Operated Land Improvement Projects under this Supplementary Budget.
To implement this Supplementary Budget, the Government shall submit separately the “Proposal for the Partial Amendment of the Special Measures Law concerning the Promotion of Social Capital Adjustment Utilizing Revenues from Sales of Nippon Telegraph and Telephone Corporation Shares,” and hopes that the Diet will take this under consideration in their deliberations.
This concludes my outline of the Supplementary Budget for FY2001 (Article Two of the General Account and Article Two of the Special Account).
This Supplementary Budget has been formulated to respond to the sudden changes in the economic environment and promote structural reforms while focusing on emergency measures from which significant economic effects can be expected.
I ask you to deliberate on the draft budget and request your prompt approval.