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Regardless of whether certain budgets are necessary to deal with important issues such as strengthening defense capabilities and measures against the low birth rate, there is no reason spending should be allowed to balloon in an unregulated manner. The government should expedite the normalization of post-coronavirus-pandemic finances.
The Finance Ministry has announced that the budget requests by each ministry and agency for fiscal 2024 totaled ¥114.3 trillion, the highest figure ever, exceeding ¥111.6 trillion in fiscal 2022.
In its annual Basic Policy on Economic and Fiscal Management and Reform that was decided in June, the government stated that it would review expenditures that had increased due to the pandemic and return its spending structure to one that fits regular times.
However, the total amount requested this time far exceeds the pre-pandemic fiscal 2020 budget requests of about ¥105 trillion. Looking at the recent requests, there is no impression that attempts were made to realize the statements described in the basic policy.
Another problem is that many requests did not specify concrete amounts.
Originally, such unspecified requests were a special exception for cases in which future policy was unpredictable. They only came into wide use once the measures against the pandemic were taken. This time, however, the unspecified requests were made for a wide range of policy issues for regular times, such as measures to deal with the low birth rate and high prices.
Since these requests are not incorporated into the total amount being asked for, the actual budget requests will increase beyond ¥114 trillion.
Among these unspecified requests, more than a few are for projects for which it is unfathomable why the amounts cannot be indicated.
The Land, Infrastructure, Transport and Tourism Ministry made such a request for the promotion of national land resilience. But this should in all likelihood be sought by prioritizing the targeted infrastructure projects and carefully examining the amounts of each project.
The Digital Agency’s unspecified request for the use of artificial intelligence (AI) at governmental and municipal organizations should not be difficult to calculate either, if the details of the projects and how to proceed with them have been established.
If ministries and agencies cannot come up with the amounts in their requests, it is inevitable that they may be suspected of neglecting the detailed design of their measures. The Finance Ministry needs to strictly assess unspecified requests in its budget compilation in order to ensure that such solicitations do not lead to an overinflated budget.
Another concern is that the budget requests for next fiscal year have inflated the cost for redemption and interest payments on government bonds.
The Bank of Japan’s move to modify its massive quantitative easing policy has caused long-term interest rates to rise slightly, resulting in an appropriation of ¥28.1 trillion for expenses related to government bonds, nearly ¥3 trillion more than the initial budget for fiscal 2023.
If interest rates rise further, the cost of interest payments will increase significantly, which could put pressure on other projects.
It is vital that budgets be secured to strengthen the nation’s defense capabilities amid the severe security environment and to address the low birth rate with the aim of maintaining national strength, among other measures. To this end, less-pressing and wasteful projects must be thoroughly identified and the budgets must be streamlined.
