Twenty Trillion Yen of Subsidy Kept Unused

Board of Audit of Japan (BAJ) released a report on situation of funds that are established under supervision of ministries of national government or prefectural governments. The first report on this issue found that there have been a large number of funds in certain ministries and that they possess a great amount of subsidy unused. The size has swollen beyond 20 trillion yen, exceeding annual national budget. BAJ recommends ministries to review their funds to eliminate its inefficiency. 

The national government of Japan issues subsidy to projects of ministries, independent administrative agencies or local governments, which are not completed within a fiscal year. Although the national government can check out how much subsidies are issued, it cannot grab how much was spent for the projects. Receiving a request from the House of Councillors in 2024, BAJ started investigation on those funds. The report is the result of the investigation.

 

According to the report, there are 191 funds with 18.79 trillion yen under supervision of ministries and 36 funds with 1.61 trillion yen in prefectural governments. The total amount of subsidy kept in those 227 funds is 20.4 trillion yen. While those funds received over 20 trillion yen of subsidy from national government, they have been reserving it without spending, causing doubt on necessity of the subsidy.

 

The government has been issuing around 1 trillion yen of subsidy for those funds every year until FY2019. It was FY2020 when that issuance abruptly increased, supposedly caused by pandemic of COVID-19. The government appropriated 10.7 trillion yen through supplemental budget in the fall of the year to support ailing economy or business. Unusually large spendings for the subsidy continued in FY2021 and later.

 

All the major funds with 1 trillion yen of reserve or more are supervised by Ministry of Economy, Trade and Industries (METI). METI was in charge of maintaining businesses during the period when consumption was drastically declined by pandemic. Those major funds under METI include ones for green innovation (2.5 trillion yen), reconstruction of small and mid-size businesses (1.5 trillion yen), semiconductors (1.3 trillion yen), mitigation on fluctuation of fuel price (1.3 trillion yen), guarantee for business management (1.2 trillion yen) and development of post-5G information communication (1.1 trillion yen).

 

A major gap between demand for their projects and actual spendings for them is seen in most funds. 36 out of 191 minitrial funds reserved 75 precent or more subsidies they received. A fund for developing digital infrastructure, under supervision of Ministry for Internal Affairs and Communications reserved 99.3 percent of subsidy in FY2022, 95.2 percent in FY2023 and 77.8 percent in FY2024. It is doubtful that they need that amount of subsidies.

 

BAJ demands the ministries to lay out stricter standard to manage those funds and recommends the funds to return unnecessary subsidies to the national treasury. However, it is unclear whether those recommendations will be implemented, because ministries and funds are likely to be dependent each other.

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