Swollen Budgetary Requests

Each ministry submitted its budgetary requests for FY 2024 to the Ministry of Finance by the end of August. Total amount of the request marked a record high of ¥114 trillion, exceeding last year by ¥3 trillion. Main reason should be positive accumulation for defense spendings, followed by Kishida administration’s focusing on security enhancement policy. However, the greatest question is how they can find the revenue for the increase of spendings. This is an undemocratic aspect of Japan’s governmental budget.

Deadline of the requests means a starting gun of yearly budgetary making. MoF will establish a draft of budget by the end of this year, considering political demands from the prime minister or the leading Liberal Democratic Party or the Komeito. The draft will be submitted as a bill to the Diet early next year and be executed, after the bill is passed, in FY 2024 starting next April.

 

Topic of this year is defense budget exceeding ¥7 trillion for the first time. Ministry of Defense assumes that it needs ¥755 billion for the stand-off defense capability, which includes a new surface-to-ship or ground-to-ground guided missiles available for striking enemy’s bases. ¥379 billion is appropriated to build two ships with Aegis system, replacing suspended ground-based system named Aegis Ashore.

 

Criticisms are always along with enhancement of defense capability. Against the stand-off defense capability, there is a fundamental question about having the capability of striking enemy’s base, in light of the constitutional principle of strictly defensive policy. It is still unclear how Japan can determine the enemy’s intention of attacking us or whether having that capability invites arms race. Low cost performance is argued on the Aegis vessels.

 

The biggest part of the budget is the spendings for social security, which amounted to ¥33 trillion. In this extremely high aged society, budget for social security has been swollen each year. The request this time added ¥586 billion to the social security budget of last year, considering natural increase of the cost for medical service and nursing care.

 

An unignorable talking point on Japan’s fiscal structure is redemption of governmental bonds. The request assumes ¥28 trillion for FY 2024, increasing ¥1.1 trillion from last year. The government supposes the interest of the bonds as 1.5%, increasing by 0.4% from the beginning of FY 2023, considering the rising trend of long-term interest. The government has the balance of notional bond to redeem as much as ¥1,026 trillion at the end of this June.

 

As some previous years, there appear some requests without actual amount. Those are mainly for implementing Kishida’s political agenda, such as “unprecedented measures on low fertility rate” or supporting families with little kids or students. It is questionable that the government does not reveal how much it will spend the money collected from the taxpayers. Arbitral spending in governmental budget leads to an authoritarian regime.

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