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It seems that only the scale, rather than the content, has taken precedence. The government and the ruling parties must recognize the danger of the current situation in which spending is expanding without limit.
The government has decided on the budget plan for fiscal 2023. The total amount of the general account is ¥114.3 trillion, an increase of ¥6.7 trillion over the initial budget for fiscal 2022. It is the first time the general account budget plan has exceeded ¥110 trillion, and the eleventh consecutive year a record-high amount has been set.
Tax revenues are also expected to reach a record high of ¥69.4 trillion, but this will not be enough to cover the increase in expenditures, which will be covered by issuing ¥35.6 trillion in new government bonds.
A situation in which more than 30% of expenditures are dependent on borrowing has become the norm. The nation’s long-term debt balance has exceeded ¥1 quadrillion and the debt continues to balloon. There is no way the government can continue to manage its finances in such a way that the burden is simply handed over to future generations.
One of the direct causes of the budget increase is defense spending. The budget allocated for defense spending is ¥6.8 trillion, up ¥1.4 trillion from the previous fiscal year. Separately, a “fund for strengthening defense capability,” in which profits from such items as the sale of national property and other assets are reserved to help cover defense expenditures in fiscal 2024 and beyond, was established, and ¥3.4 trillion was secured.
Social security spending also increased by ¥620 billion from the previous year to ¥36.9 trillion. Although medical expenses were curbed by reducing drug prices, the “baby boomers” are turning 75 years old, and the expansion of medical and nursing care costs is accelerating.
The increase in defense spending is only natural, and the increase in social security spending is unavoidable. Therefore, it is important to make every effort to improve the efficiency of other expenditures.
In addition to checking ongoing projects that have had little effect, the Diet must carefully examine the budget to ensure no essential or urgent projects have been included under such labels as “decarbonization” or “measures to tackle the low birth rate.”
The budget plan includes ¥5 trillion in reserve funds, which the government can spend without Diet deliberation. This is the same amount as in the previous year when the COVID-19 pandemic was severe. The government should carefully explain why such substantial reserve funds are necessary now that economic activities have normalized.
About ¥94 trillion, including supplementary budgets, was earmarked from fiscal 2019 to fiscal 2021 for COVID-19 measures, but as of the end of fiscal 2021, about ¥18 trillion was unused. It is problematic if the budget is being allocated based on the size of the previous year’s budget without examining the situation.
In the fiscal 2023 budget plan, ¥25.3 trillion has been earmarked for the national debt service cost — for such purposes as interest payments on government bonds — marking an increase of ¥910 billion from the previous fiscal year. With the Bank of Japan’s decision to modify its monetary easing measures, there are concerns that interest rates will rise, further increasing the burden of interest payments.
The government needs to redraw the road map for long-term fiscal reconstruction and present it to the public as soon as possible.
