The Abe Cabinet on June 14 adopted two sets of economic policy papers — the economic growth strategy and the basic policy of economic and fiscal management. It plans to achieve average growth of 3 percent in nominal terms and 2 percent in real terms for the coming 10 years. It also plans to post a surplus in the primary balance — a gauge to show how much policy-related spending is covered by tax and other revenues independent of bond issuance — by 2020.
But the growth strategy lacks a focus because it is primarily a wish list of projects for which individual government ministries want to get budgets as part of the "Abenomics" agenda. The government's plan to achieve fiscal health also fails to show concrete ways to attain it.
The basic policy of economic and fiscal management says that spending on social security and public works projects as well as local government finances will be strictly reviewed. But big spending on public works projects, included that in the fiscal 2012 supplementary budget enacted under the Abe administration — the second largest supplementary budget ever — will enlarge the nation's financial deficit.