(June 26): The Japanese government will continue to maintain fiscal sustainability as it compiles budgets and makes investment decisions, the finance minister said, after Prime Minister Sanae Takaichi unveiled a US$2.3 trillion, long-term investment roadmap along with sweeping budget reforms.
“The prime minister made clear yesterday that the investment framework will be of a necessary and sufficient scale while ensuring fiscal sustainability,” Finance Minister Satsuki Katayama told reporters on Friday.
The remarks came after the government released a roadmap extending through fiscal 2040 that envisions more than ¥370 trillion in public and private investment across strategic sectors, including artificial intelligence and semiconductors. The plan doesn’t specify how much the government itself will spend, or how its share will be financed.
The government also announced a new multi-year budget framework for long-term growth initiatives, separate from the annual budget process. Katayama said ministries would be able to request the funding needed for eligible projects without caps under the new framework, signaling the government’s willingness to make adequate growth-enhancing investments.
At the same time, Katayama stressed that fiscal discipline would remain central to the overhaul, seeking to reassure investors concerned about Japan’s spending plans and debt burden.
“The prime minister also instructed us to continue reforming government spending,” she said. “Within that effort, we must clearly distinguish between expenditures that should be maintained and those that should be reviewed, while ensuring disciplined allocation of resources.”
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She added that ministries would continue reviewing tax breaks and subsidies, reassessing priorities and concentrating resources on the most effective policies.
“Just because growth-related spending is no longer subject to the usual spending caps doesn’t mean anything goes,” Katayama said. “Wasteful spending is still wasteful, and priority areas remain priorities.”
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