Efforts to curb rising social security spending and rehabilitate tattered government finances should continue at the same level as the last three years until fiscal 2018, according to a draft of the Abe administration’s fiscal and economic policy blueprint.
But the draft fails to set a specific numerical target for spending under the general budget, as the administration is counting on a revenue increase derived from economic growth to achieve its key fiscal reform goal of turning the primary balance into a surplus by fiscal 2020.
The draft, released Monday, calls on the government to limit increases in social security spending at ¥1.5 trillion in the next three years through fiscal 2018, the same level posted in the past three years.
It also urges the government to hold the line and keep increases in general policy spending, including social security costs, at around ¥1.6 trillion, as seen in the past three years. However, it says this figure should be used only as a “rough indication.”
The draft, which includes a fiscal rehabilitation plan for the next five years to meet the government’s fiscal goal, was presented at a meeting of the Council on Economic and Fiscal Policy attended by Prime Minister Shinzo Abe.
Under the draft, the government will set a medium-term goal of reducing the primary balance deficit to 1 percent of gross domestic product by fiscal 2018. That compares with a projected deficit for the current year of 3.3 percent.
The government will designate the next three years through March 2019 as a “period of intensive reform” to meet this goal. It will assess progress in the final year of the three-year period and consider additional measures if needed, the draft says.
The government’s fiscal health is the worst among major industrialized economies, with public debt at more than 200 percent of nominal GDP due mainly to swelling social security costs amid the aging society.
To pursue growth, the government will encourage investment in technology, human resources and other fields in the private sector, while looking to revitalize local economies through such measures as supporting exports of agricultural products and boosting tourism.
Ahead of the 2020 Tokyo Olympics, the government will promote the creation of new industries and services with the country’s advanced automated driving technology and hydrogen energy, according to a draft of the government’s growth strategy presented at a meeting of the Industrial Competitiveness Council.
To enhance Japan’s global competitiveness, the government will proceed with measures to double the number of foreign employees specializing in information technology, from such countries as India and Vietnam, to 60,000 by 2020.
The government, which aims to draw more than 30 million tourists annually by 2030, plans to ease visa requirements.
To revitalize local economies, the government aims to triple the number of duty-free shops in local tourist spots around the country to around 20,000 by 2020.
The plan comes as the number of inbound travelers reached 13.41 million in 2014, up 29.4 percent from the previous year, and their spending grew to a record ¥2.03 trillion, helped by the yen’s depreciation and relaxed visa requirements.
To expand farm and fishery exports, the government will focus on specific products such as rice and beef that have potential to grow further and move up achieving its 2020 goal of boosting exports of farm products to ¥1 trillion from ¥611.7 billion in 2014.